- Px= $5, Py= $10, I= 300 -Budget constraint: 5x+10y=300 - MRSxy= Y/2x Suppose Mary’s income...

- Px= $5, Py= $10, I= 300

-Budget constraint: 5x+10y=300

- MRSxy= Y/2x

Suppose Mary’s income had remained unchanged at $300. But the price of Good X falls to $3. Price of Good Y remains unchanged. Construct Mary’s Price Consumption Curve and Mary’s Demand Curve for Good X.

Expert Solution

Rahul Sunny answered 2 years ago

Assume M=$100, PX=$5 and PY =$10. Graph the budget constraint. Label the intercepts with their appropriate...

Assume M=$100, PX=$5 and PY =$10. Graph the budget constraint. Label the intercepts with their appropriate numbers and the slope as well Now let’s assume income doubles so that M=$200. On the same space as above, graph the new budget constraint while appropriately labeling everything again. Need help with third part: Assume M=$100 again. But now, the price of good X increases from $5 to $10. Graph a 3rd budget constraint on the above graph and label everything.

Suppose a consumer has preferences given by U(X,Y) = MIN[2X,Y]. Suppose PX = 1 and PY...

Suppose a consumer has preferences given by U(X,Y) = MIN[2X,Y]. Suppose PX = 1 and PY = 2. Draw the Income Consumption Curve for this consumer for income values • M = 100 • M = 200 • M = 300 To do this, carefully draw the budget constraints associated with each of the prices for good X, and indicate the bundle that the consumer chooses in each case. Also, be sure to label your graph accurately.

10) If MUx/Px < MUy/Py, then A) spending a dollar less on Y and a dollar...

10) If MUx/Px < MUy/Py, then A) spending a dollar less on Y and a dollar more on X increases utility. B) spending a dollar less on X and a dollar more on Y increases utility. C) X is more expensive than Y. D) Y is more expensive than X. 11) Ellie is spending her entire income on goods X and Y. Her marginal utility from the last unit of X is 100 and the marginal utility from the last...

One reasonable consumer is choosing to maximize U(X,Y)=XY under a budget constraint of PxX+PyY=M. (Px,Py,M)=(4,2,24). (1)...

One reasonable consumer is choosing to maximize U(X,Y)=XY under a budget constraint of PxX+PyY=M. (Px,Py,M)=(4,2,24). (1) Explain what Px/Py=2 means. (2) Draw a budget line. (3) Draw an indiscriminate curve that conforms to a given utility function. (4) Find the optimal consumption (X*,Y*). (5) Calculate the income elasticity of demand for product X.

One consumer is choosing to maximize U(X,Y)=XY under a budget constraint of PxX+PyY=M. (Px,Py,M)=(4,2,24). (1) What...

One consumer is choosing to maximize U(X,Y)=XY under a budget constraint of PxX+PyY=M. (Px,Py,M)=(4,2,24). (1) What does Px/Py=2. mean in this case? (2) Draw a budget line. (3) Draw an indiscriminate curve that conforms to a given utility function. (4) Find out the optimal consumption (X*,Y*). (5) Calculate the income elasticity of demand for X goods.

(1) Suppose the optimal bundle of x and y for a consumer satisfies "tangency", MRS=Px/Py Explain...

(1) Suppose the optimal bundle of x and y for a consumer satisfies "tangency", MRS=Px/Py Explain in words why this consumer would not want to choose a different bundle where MRS > Px/Py. (2) Explain the difference between a Demand for a good, and a Demand Function for a good.

Let U=X1/2Y2, dU/dX=(1/2)X-1/2Y2, dU/dY=2X1/2Y Px=$15, Py=$3 and I=$300 For the rest of this problem, suppose Px...

Let U=X1/2Y2, dU/dX=(1/2)X-1/2Y2, dU/dY=2X1/2Y Px=$15, Py=$3 and I=$300 For the rest of this problem, suppose Px has decreased to $6. 11.(2 pts) _________________________What is the value of Y on the new income consumption curve when X=6? 12. (5 pts) _______________________________________ Find the new values of X, Y and U which maximize happiness. 13.(4 pts)________________________________________What is the equation for the PCC for X (X as a function of Y or Y as a function of X) for Py=$3 and I=$300?

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- Px= $5, Py= $10, I= 300 -Budget constraint: 5x+10y=300 - MRSxy= Y/2x Suppose Mary’s income...

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