Presume a person has 80 to spend only on two products x and, Ask an Expert

Economics

Presume a person has $80 to spend only on two products: x and y. X cost $4 each, and Y cost $1 each. This person has preferences for X and Y given by

Utility =?XY

1. What is the utility-maximization bundle of this person?

2. Sketch his indifference budget and curve line to illustrate the point you found in previous question.

3. Presume the price for X increases to $5 each. What is the new bundle of X and Y as a result of income effect?

4. From the previous part, what is the bundle this person will arrive at if the substitution effect takes place? It must be note here that 5=2.236

5. Use a graph to illustrate the three bundles you have found. You graph must contain two indifference curves and two budget lines.

6. Draw a demand curve of product X

View complete question

Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M91223292

Have any Question?Write your Review or question?

Related Questions in Microeconomics

Question workers comp is a specific choice by an individual

Question: Workers comp is a specific choice by an individual firm. A. Explain and show graphically, with reference to indifference curves and Isoprofit curves, why there has been growth in fringe benefits relative to wag ...

Question discuss your impressions related to how

Question: Discuss your impressions related to how globalization has changed the community you grew up in, focusing on changes that are viewed positively by community members, and those that are viewed negatively. Explain ...

Question draw two supply and demand graphs one for each

Question: Draw two Supply and Demand graphs (one for each problem) and show what happens to price and quantity a. in the market for chocolate ice cream when new technology improves production. b. in the market for cigare ...

Question research on how supervisors rate employees who

Question: Research on how supervisors rate employees who work under them has found that in some firms as many as 95 percent of all ratings are "good" or "outstanding." a. Is this necessarily evidence that supervisors are ...

Question compare two cars a and b the initial cost of car a

Question: Compare two cars A and B. The initial cost of Car A is $500 more than Car B. However Car A consumes 0.01 less gallons/mile compared to B. Given that B's salvage value is $100 smaller than A's after an expected ...

Question -a a price-discriminating monopolist serves two

Question - a. A price-discriminating monopolist serves two markets: young professionals and university students. The demand curve of the young professionals for this product is q 1 = 100 + 40p 1 - p 1 2 and the demand cu ...

Question paper details a 5-7 page including cover and

Question: Paper Details: A 5-7 page (including cover and reference pages so about 3-5 of actual writing) research paper APA style, 12 pt font double spaced. You must cite at least 2 sources that are from peer-reviewed ar ...

Question - although the federal reserve has purchased over

Question - Although the Federal Reserve has purchased over $2 Trillion in bonds during quantitative easing, how much has the money supply increase since August 2008? At the time was future inflation still a concern?

Question in the early 1980s the us rate of inflation fell

Question: In the early 1980s, the US rate of inflation fell from 13% to 4%, government regulation decreased and deregulation increased, and the Reagan Administration passed significant tax incentives to boost saving and ...

Question in emerging markets such as india consumers shop

Question: In emerging markets such as India, consumers shop far more frequently than in most Western countries, often daily. As a result, consumers there have many more chances to switch brands. What does this buying beh ...

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 Microeconomics Expert