Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Microeconomics Expert

problem 1: Assume that a consumer’s preferences are represented by the utility function U = MIN(X, 4Y). The price of Y is PY = 2, and the consumer has income, M = 210.

a) Graph the consumer’s Price consumption curve for prices, PX = 1, PX = 2, and PX = 3. Be sure to label your graph cautiously and precisely.

b) Graph the consumer’s demand curve for X. Be sure to label your graph carefully and correctly.

problem 2: Assume that a consumer’s utility function is given by U(X, Y) = X*Y. As well, the consumer has $576 to spend and the price of X, PX = 16 and the price of Y, PY = 4.

a) How much X and Y must the consumer purchase in order to maximize her utility?

b) How much total utility does the consumer receive?

c) Now assume that PX reduces to 9. What is the new bundle of X and Y that the consumer will demand?

d) How much money would the consumer require in order to have the same utility level after the price change as before the price change?

e) Of the total change in the quantity demanded of X, how much is due to the substitution effect and how much is due to the income effect?

problem 3: Assume that there are two consumers, A and B.

The utility functions of each consumer are provided by:

UA(X, Y) = X*Y
UB(X, Y) = 2X + Y

The initial endowments are as follows:

A: X = 4; Y = 2
B: X = 6; Y = 8

a) By using an Edgeworth Box, graph the initial allocation and draw the indifference curve for each consumer which runs via the initial allocation. Be sure to label your graph carefully and correctly.

b) Determine the marginal rate of substitution for consumer A at initial allocation?

c) Determine the marginal rate of substitution for consumer B at the initial allocation?

d) Is the initial allocation Pareto Efficient?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9346

Have any Question? 


Related Questions in Microeconomics

Question consider the following model of trade between home

Question: Consider the following model of trade between Home and Foreign. Assume throughout that those two countries are the only two countries in the world, at least for purposes of trade. There are two goods: Tables an ...

Question in an effort to reduce energy costs a major

Question: In an effort to reduce energy costs, a major university has installed more efficient lights as well as automatic sensors that turn the lights off when no movement is present in a room. Historically, the cost of ...

Question assume the karolina cucoos are a minor league

Question: Assume the Karolina Cucoos are a minor league, small town baseball team. The demand for tickets to watch them play is: P = 40 - .005Q. A) Assume MC = 0, and that stadium capacity is unconstrained. What is the p ...

Question what are the economic differences during the time

Question: What are the economic differences during the time between Bush and Obama? What are the impacts of these differences on the national debt? The response must be typed, single spaced, must be in times new roman fo ...

Question why are the themes of managing teams managing the

Question: Why are the themes of managing teams, managing the multicultural workforce, managingglobalization, managing ethics and CSR, and managing with metrics so important today? Which of these challenges is likely to i ...

Question why did the price fall and quantity rise suppose

Question: Why did the price fall and quantity rise. Suppose you are told that last year the price of peanuts fell and the quality sold increased. Using supply and demand analysis explain how these changes occurred. The r ...

Question you can choose between machine a or b your

Question: You can choose between Machine A or B. Your interest rate is 6%. You need a Machine for an infinite time. a. Machine A costs $22,000 and lasts for 3 years. It has no salvage value and costs an additional $15,00 ...

Question inflation and unemploymentsuppose that the

Question: Inflation and unemployment Suppose that the government believes the economy is not producing goods and services at its optimal level. In an attempt to stimulate the economy, the government increases the quantit ...

Question what are the assumptions of the monopolistic

Question: What are the assumptions of the Monopolistic Competition Model? Even if there exist same number of consumers, same technology and cost curves and the same number of firms in the no-trade equilibrium both at HOM ...

Question in 1998 brazil had a per capita gdp of about 4500

Question: In 1998, Brazil had a per capita GDP of about $4,500, compared to per capita GDP of about $28,000 in the US. (A) If per capita growth were to average 2% per year indefinitely in the US and 5% per year in Brazil ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As