Question
In: Economics
bob's perferences over goods (x) and (y) are shown by U(x,y) = 2xy. his income is...
bob's perferences over goods (x) and (y) are shown by U(x,y) = 2xy.
his income is 100.
A) Calculate the optimal basket when Px = $50 and Py = $20.
show your work
B) Calculate his income and substituion effects ( if
necessary, round two decimal places) if P falls to $40. show your
work
C) is good (x) normal or inferior? supprt/explain your
answer
D) Solve for the compensating variation. Explain what the
value represents. show your work.
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
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u ( x , y ) = x ⋅ y.
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A consumer spends all of his income only on two goods, X and Y. His utility...
A consumer spends all of his income only on two goods, X and Y.
His utility function is given by U=XY. The price of good X is $P
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(4) Derive the PCC (price consumption curve) of this consumer as
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A consumer spends all of his income only on two goods, X and Y. His utility...
A consumer spends all of his income only on two goods,
X and Y. His utility function is given by
U=XY. The price of good X is $P and the
price of good Y is $2. His income is $400.
Derive the PCC (price consumption curve) of this
consumer as the price of good X changes .
Derive this consumer’s demand function for good
X.
As the price of good X falls, this consumer’s demand becomes
less elastic. True or...
An individual has the utility function u = min (x, y). His income is $ 12....
An individual has the utility function u = min (x, y). His
income is $ 12.
Initially, the prices were px = 4 and py = 1, and the individual
consumed the basket x = y = 2.4.
Then, px increases to $ 6 (py does not change), and the individual
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b) (10 points) Find the cross-price elasticity of demand for x
(E x ∗ , p y:...
Jones spends all his income on two goods: X and Y. The price of good X...
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wishes to maximize utility, given the budget.
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line when...
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