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 soapy inc and suddies inc are the only producers

Question: Soapy Inc. and Suddies Inc. are the only producers of soap powder. They collude and agree to share the market equally. If neither firm cheats on the agreement, each makes $1 million profit. If either firm cheat ...

Question a manager is considering two technological lines

Question: A manager is considering two technological lines to produce candies. The first one requires $1 million in initial investment and produces 150 kilograms (kg) of candies per day. The second one requires $1.3 mill ...

Question 1 gladys loves books and spends her money only on

Question: 1. Gladys loves books and spends her money only on mysteries and science fiction novels and has a budget of $60 to spend on these two types of books. She is always willing to trade 2 mystery novels for 1 scienc ...

Question the demand curve for round trip air transportation

Question: The demand curve for round trip air transportation between cities is given by Q= 5,000P^-0.8 X^0.2 y^0.5 z^.2 where P is price, x is flying time, y is air distance, and z is total population in the two cities. ...

Question book principles of microeconomics ryan amacher amp

Question: Book Principles of Microeconomics: Ryan Amacher & Jennifer Pate Market Structures In an eight- to 10-page paper, describe each market structure discussed in the course (perfect competition, monopolistic competi ...

Question in each of the following examples discuss which

Question: In each of the following examples, discuss which market model appears to best explain the behavior described: a. Corn prices reached record highs in the United States in August 2012, given the worst drought in ...

Question the index of consumer expectations dropped much

Question: The index of consumer expectations dropped much more sharply before the brief and mild 1980 recession than it did before the much more severe and prolonged 1981-2 recession. The same pattern also occurred for t ...

Question the initial price of a cup of coffee is 1 and at

Question: The initial price of a cup of coffee is $1, and at that price, 400 cups are demanded. If the price falls to $0.90, the quantity demanded will increase to 500. a) Calculate the (arc) price elasticity of demand f ...

Question acknowledging country risks and opportunities

Question: Acknowledging country risks and opportunities relative to key exports is essential in comprehending the effect of globalization on our world economy. Compare and contrast the strengths, weaknesses, opportunitie ...

Question what could the government do to try and keep the

Question: What could the government do to try and keep the economy from entering a recession because of the adverse supply shock? Depict this graphically. (Alternatively - what has to shift in response to a negative supp ...

  • 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