can you explain how they got the answers here 10.Derek has utility for good 1 and good 2 given by u = x1/³x/³.(d)(e)What is Derek's Marginal Rate of Substitution, dr2?When ₁ = 2 and x2 = 8, how much of good 2 is Derek willing to give up toget 1 extra unit of good 1?(c)When x₁ = 8 and x₂ = 1, how much of good 2 is Derek willing to give up toget 1 extra unit of good 1?Explain why the two rates in parts (b) and (c) are different.How are your answers to the above questions different for Derek's friend Joe,who has utility given by v = x²/³x2/³?Solution: a) dx2X2I1dx2X2⇒ dx₂dx₁X1-4dx₁ ⇒ dx₂-4(1) ⇒ 4 units. c)-(1/4) dx₁ ⇒ dx2−(1/4)(1) ⇒ 0.25 units. d) When he has a lot of x2 and a little of x₁ in part(b), his marginal utility of x2 is relatively low and his marginal utility of £₁is relatively high. Therefore, he is willing to give up a lot of x2 to get anadditional unit of x₁. The opposite is true in part (c). e) They would notchange; Joe's utility is a monotonic transformation of Derek's.dx2dx1=X2I1→dx₂-==

Derek's utility function: The marginal rate of substitution between good 1 and good 2 represents the…

(a) (b) (c) 1/3 1/3 Derek has utility for good 1 and good 2 given by u = x₁x₂. What is Derek's Marginal Rate of Substitution, d2 ? dx₁ When ₁2 and 2 = 8, how much of good 2 is Derek willing to give up to get 1 extra unit of good 1? = 8 and ₂ When 1 get 1 extra unit of good 1? = 1, how much of good 2 is Derek willing to give up to

(a) (b) (c) 1/3 1/3 Derek has utility for good 1 and good 2 given by u = x₁x₂. What is Derek's Marginal Rate of Substitution, d2 ? dx₁ When ₁2 and 2 = 8, how much of good 2 is Derek willing to give up to get 1 extra unit of good 1? = 8 and ₂ When 1 get 1 extra unit of good 1? = 1, how much of good 2 is Derek willing to give up to

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter5: Consumer Choice: Individual And Market Demand

Section: Chapter Questions

Problem 3DQ

See similar textbooks

Similar questions

What is the rule relating the ratio of marginal utility to prices of two goods at the optimal choice? Explain why, if this rule does not hold, the choice cannot be utility-maximizing
Who determines how much utility an individual will receive from consuming a good?
Take Jeremys total utility information in Exercise 6.1, and use the marginal utility approach to confirm the choice of phone minutes and round trips that maximize Jeremys utility.
Would you expect total utility to rise or fall with additional consumption of a good? Why?
Give only typing answer with explanation and conclusion to all parts Martina’s preferences are represented by u(x , x ) = x2 + x3 , where x > 0, x > 0. (1) What is the marginal utility of good 1 at (x1, x2)? (2, 3)? (2) What is the marginal utility of good 2 at (x1, x2)? (3, 2)? (3) What is the marginal rate of substitution of good 2 for good 1 at (x1, x2)? (2, 2)? (4) Redo (1),(2),(3) for another representation v(x1,x2)=ln(x^1/2 +x^(1/3).)
ASAP!! ANSWER PLEASE Danish Wali has Rs.70 to spend on apples and bananas and wants to maximize his utility on his purchase. Based on the data in the table: How many apples and bananas should Danish purchase? What is his total utility from the purchase? Does the utility-maximizing rule hold true for his purchase? Explain. Apples Rs.10 Bananas Rs .5 Quantity MU TU Quantity MU TU 0 - - 0 - - 1 28 28 1 12 12 2 24 52 2 10 22 3 20 72 3 8 30 4 16 88 4 6 36 5 12 100 5 4 40 6 8 108 6 2 42 7 4 112 7 0 42 8 0 112 8 -2 40
3. Explain the law of diminishing marginal utility with the help of examples and also explain the assumption under which this law is applicable and what the exceptions are where this law does not hold.
4. What is the difference between substitution and complementary goods? Give an example for each goods! What will happen to quantity demanded of X if a price of substitutes goods decreased and to quantity demanded of Y if a price of complements goods decreased? Show with graph!
1.There are two goods F and C. Let MU and P denote marginal utility and price of each good. SupposeMUF = 2,MUC = 1,PF = 1,PC = 2.Are you maximizing your satisfaction? If not, what would you do to increase your satisfaction? Explain. 2.What is the substitution eﬀect? Can it cause the quantity to decrease given a decrease in price? Explain 3.What is the income eﬀect? Can it cause the quantity to decrease given a decrease in price? Explain