Question
In: Economics
Jones spends all his income on two goods: X and Y. The price of good X...
Jones spends all his income on two goods: X and Y. The price of good X is PX = 15. The quantity of good X consumed is X = 20. The price of good Y is PY = 25 and the quantity of good Y consumed is Y = 30.
A) Based on Jones's consumption choices, what is his income?
B) If the prices next year will be PX = 9 and PY = 45, and Jones's income will be 1530, will he be better or worse off economically? Explain your answer by drawing indifference curves.
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
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.
(4) Derive the PCC (price consumption curve) of this consumer as
the price of good X changes .
(3) Derive this consumer’s demand function for good X.
(3) As the price of good X falls, this consumer’s demand becomes
less...
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...
A consumer spends all of her income(Y) on two goods Z and B.The price of good...
A consumer spends all of her income(Y) on two goods Z and B.The price of good B (PB) is $6. The Marginal Rate of Transformation MRT is equal to −2. That is 2 units of good B can be traded for 1 unit of good Z.This consumer is able to buy 18 units of good Z and 0 units of good B with his/her income. What is this consumer's level of income?
The consumer's income is $ ( )(round your...
If a consumer spends all her income on two goods X and Y , then she...
If a consumer spends all her income on two goods X and Y , then
she can just afford either consumption bundle (5, 10) or (10, 7.5).
Write the equation of her budget line.
Suppose a consumer spends all her income on goods X and Y. Suppose the price of...
Suppose a consumer spends all her income on goods X and Y.
Suppose the price of good X increases, and the consumer's income
decreases. Which of the following must be true?
The amounts of both good X and good Y that the consumer can
purchase decrease.
The amount of good Y that the consumer can purchase
decreases.
The amount of good X that the consumer can purchase
decreases.
The amount of good X that the consumer can purchase decreases,
and...
Sudi spends his income on two goods. His income elasticity of demand for the first good...
Sudi spends his income on two goods. His income elasticity of
demand for the first good is ~1 = 0.2, while his income elasticity
of demand for the second good is ~ 1 = 2. Illustrate in one diagram
how a 10% increase in his income would affect the quantity he
demands of the two goods that shows an incomeconsumption curve, and
create another diagram for each of the two goods that shows an
Engel curve. How do the slopes...
A consumer spends his entire monthly income on x and y. The price of a unit...
A consumer spends his entire monthly income on x and y. The
price of a unit of x is $16 and the price of a unit of y is $12. If
he consumes the bundle (x, y) = (40, 30), his MRS x for y is 3/2,
meaning he would be indifferent to giving up 3 units of y to get 2
more units of x (or vice versa). Is this consumption plan optimal?
If not, does the plan consumer...
Jane spends all of her $200 weekly income on two goods, X and Y. Her utility...
Jane spends all of her $200 weekly income on two goods, X and Y.
Her utility function is given by U(X,Y) = 2XY, If the price of X =
$4/ unit and the price of Y = $10 a unit, how much of Y should she
buy?
Suppose John has an income of $300 and spends his income to purchase two goods (X...
Suppose John has an income of $300 and spends his income to
purchase two goods (X and Y ). Price of Y is $5 and price of X is
$10. Furthermore, John always consumes 2 units of Y with 1 unit of
X. (a) How many units of X and Y should John consume in order to
maximize his utility? (b) Suppose that the price of X goes up to
$15 (income and price of Y are the same). How...
Suppose John has an income of $300 and spends his income to purchase two goods (X...
Suppose John has an income of $300 and spends his income to
purchase two goods (X and Y ). Price of Y is $5 and price of X is
$10. Furthermore, John always consumes 2 units of Y with 1 unit of
X. (a) How many units of X and Y should John consume in order to
maximize his utility? (b) Suppose that the price of X goes up to
$15 (income and price of Y are the same). How...
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