Elles preferences over apples a and bananas b are, Ask an Expert

Economics

Elle's preferences over apples (A) and bananas (B) are represented by the Cobb-Douglas utility function; u(A; B) = AB. (a) Write down the optimization problem. What is the objective function? What are the choice variables? What is the constraint? (b) What are the optimality conditions? Explain. (c) Derive her individual demand curves for apples and bananas as functions of the prices and income. (d) What is her optimal bundle if her income is $100, and bananas are $1 a pound and apples are $2 a pound. (e) What is her new optimal bundle if price of apples go down by 1 dollar? What is the substitution effect of this price change? What is the income effect of this price change?

View complete question

Business Economics, Economics

Category:- Business Economics
Reference No.:- M91676431

Have any Question?Write your Review or question?

Related Questions in Business Economics

Assume that the number of customers who arrive at a water

Assume that the number of customers who arrive at a water ice stand follows the Poisson distribution with an average rate of 6.4 per 30 minutes. What is the probability that more than one customer will arrive during the ...

Why does some workers earn higher wages than others some

Why does some workers earn higher wages than others, some landowners higher rental income than others, and some capital owners greater profit than others? (Example)Why, in particular, do computer programmers earn more th ...

Pure gasoline has an energy density of 115600 btu per

Pure gasoline has an energy density of 115,600 BTU per gallon, while ethanol has an energy density of 75,670 BTU per gallon. Gasoline cost $3.70 per gallon. What would the price of E85 (85% ethanol, 15% gasoline) have to ...

Thirty-five percent of teens buy soda pop at least once

Thirty-five percent of teens buy soda (pop) at least once each week. Eleven kids are randomly selected. The random variable represents the number of these kids who purchase soda (pop) at least once each week. For this to ...

Amongnbsp22- tonbsp27-year-oldsnbsp32 say they

Among 22?- to 27?-year-olds, 32?% say they have called a talk show while under the influence of alcohol. Suppose seven 22 to 27?-year-olds are selected at random. ?(a) What is the probability that at least one has not ca ...

Suppose the timing device used in thenbspmensnbsprace

Suppose the timing device used in the men's race failed to activate at the start of the race and instead began to record the times seconds into the race. Consider how the competitors' times would be affected. Would th ...

Consider the following cournot oligopolythere are two

Consider the following Cournot oligopoly: There are two identical firms in the industry, which set their quantities produced simultaneously. The two firms face a market demand curve, Q = 120 - P, in which Q = q1 + q2. Ea ...

What are the implications of the shift from medical care to

What are the implications of the shift from medical care to the focus on overall health conditions?

If a woman takes an early pregnancy test she will either

If a woman takes an early pregnancy test, she will either test positive, meaning that the Suppose that if a woman really is pregnant, there is a 98% chance that she will test test says she is pregnant, or test negative, ...

Youve entered a contract to purchase a new house and the

You've entered a contract to purchase a new house, and the closing is scheduled for next week. It's typical for some last-minute bargaining to occur at the closing table, where sellers often try to tack on extra fees. Yo ...

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

Recent Questions

Ask Business Economics Expert