4. Michael has the utility function u(x, y) = √√x + √√y. Michael's preferences are strongly increasing and strongly convex. You don't need to show this. (a) Compute the expenditure minimizing demands for x and y as functions of utility u and prices. (b) Compute the CV when prices and income change from (Px, Py, 1) = (10,10,10) to (5,20,20).
Q: Investment Goods A D Consumption Goods Which of the following statements concerning the above…
A: A production possibility frontier (PPF) shows the maximum possible output combinations of two goods…
Q: A firm is currently hiring capital and labor so that MPL/PL<MPK/PK, if the firm wishes to maximize…
A: Marginal product of an input is the additional output produced by using additional unit of the input
Q: If utility is given by U(x, y) = x2 + y2 and px = 2, py = 3, I = 50, this person will choose: a.…
A: The above utility function behaves similar to perfect substitute. Although the marginal utility is…
Q: A local electricity-generating company has a monopoly that is protected by an entry barrier that…
A: A monopoly is a system of markets that is distinguished by a single entity's exclusive control or…
Q: The demand and supply functions for box office movie rentals on satellite TV are given as: Qd =200…
A: CS is the difference between what consumers are willing to pay for a good or service and what they…
Q: Two countries, Richland and Poorland, are described by the Solow model. They have the same…
A: The per worker production function, denoted as f(k), can be derived from the Cobb-Douglas production…
Q: Because a famous airplane like the Spruce Goose is fixed in supply, its price is O supply…
A: Equilibrium in the market is determined by the market forces of demand and supply.
Q: Price P1 PO P2 DO 51 E1 50 Q1 'EO 00 $1 50 DO Quantity a. Based on the above graph, the price…
A:
Q: Explain with clear brief points with correct answer - please do not attempt to answer if you are not…
A: This article is studying the relationship between the hammer price and the scrap value of silver…
Q: Each of the governments of Brazil and Turkey has issued bonds in Brazilian real (BRL) and Turkish…
A: Given information Face Value Price Brazil BRL 10,000 BRL 9,630 Turkey…
Q: Consider an industry in which the production technology yields the cost function C(Q)=1800+(3Q)².…
A: Assessing both expenses and earnings is essential when setting reasonable rates for products and…
Q: Figure 3 a) Refer to Figure 3. If this market is perfectly competitive, the output level exceeds the…
A: Perfectly competitive market: A market structure characterized by a large number of buyers and…
Q: How much money is needed to establish a scholarship fund paying scholarships of $320 each month if…
A: Given Periodic payment (A)=$320 Length of each period =1 month Rate of interest r= 21.7% per year…
Q: 1. In her last-minute preparations for final exams, a student has set aside five hours to split…
A: Marginal value refers to the additional value or benefit gained from consuming or producing one more…
Q: Explain how a business, organization or community can deal with increased demand during it's busy…
A: To cope with increased demand for the duration of its busy season, a enterprise, organization, or…
Q: Your plant has fixed costs of $400,000. If they increase by $20,000 every year for the next 10…
A: EUAC stands for Equivalent Uniform Annual Cost. It is used to evaluate the cost of an investment or…
Q: Macronia's GDP is S The income-based estimate of Macronia's GDP is $ billion. The value of the…
A: GDP represents the overall worth of goods and services that are produced inside the nation. It…
Q: 1c. Using Excel or grid paper, based on the above information, plot the demand curve, MR curve, MC…
A: profits = Total Revenue - Total Cost. MR (at Q=2) = TR (at Q=2) - TR (Q =1) MC (at Q=2) = TC (at…
Q: Explain why Calvin's ideas about supply and demand are wrong.
A: The concept of demand and supply is fundamental to understanding how markets operate. In economics,…
Q: what is the maximum return period for agricultural land ?
A: The amount of time taken to recover an investment or project to generate enough income or returns to…
Q: Paulina sells beef in a competitive market where the price is $8 per pound. Her total revenue and…
A: A perfectly competitive firm produces its output where Price is equal to Marginal Cost. => P = MC…
Q: Refer to the figure at right. Which allocation is efficient? OA. A and B B. B and C OC. C and D OD.…
A: A pareto efficient allocation is the allocation where there is no possibility to make 1 individual…
Q: Asset Amount (billions of dollars) Currency $84 Demand deposits 81 Money market funds 45 Other…
A: The money that is supplied in an economy by the central bank is known as the money supply. It can be…
Q: Suppose an economy consists of the Coal, Electric, and Steel sectors. Denote the prices (that is,…
A: The value of one currency in another currency's terms is known as the nominal exchange rate. It also…
Q: Price Level P a 1 LAS I G Reference. Figure 9-16 F T B Q, Q₂ Real Output SAS, SAS, Refer to the…
A: Aggregate supply refers to the total amount of goods and services that all firms in an economy are…
Q: A firm has the production function q = f(L, K) = L0.5+ K0.5 This firm has: O increasing returns to…
A: The production function exhibits increasing returns to scale if the increase in input by 'm' times…
Q: 7. Use of discretionary policy to stabilize the economy Should the government use monetary and…
A: Discretionary policy refers to the deliberate actions taken by government authorities, such as the…
Q: Exhibit 20-4 Macro AD/AS Model Price level (CPI) 0 4 8 increased by $1.6 million O decreased by $1.6…
A: ***Since, none of the given options match the correctly calculated value, hence, the given options…
Q: Number of CDs listened to in a week 1319 53 Reference: Figure 2-5 O % article. O2 articles. 4 O1…
A: Opportunity cost is an economic concept that refers to the value of the next best alternative…
Q: esult. All assets decline in value by 20 percent of c Installation costs .LOADING... are zero for…
A: Economic lives for an asset refers to the time period when the asset is useful for the owners. The…
Q: Assume that the Eurozone and the USA are the only economies in the world. In the last year, the REAL…
A: States are able to concentrate their efforts on delivering items and services that are capable of…
Q: . Using the information in the chapter, suppose Home doubles in size, while Foreign remains the same…
A: production capacity: refers to the maximum amount of goods and services that can be produced within…
Q: 7. Use of discretionary policy to stabilize the economy Should the government use monetary and…
A: Discretionary policy is a macroeconomic policy that is chosen by policymakers' judgement in the…
Q: The block-pricing monopoly faces a linear demand curve for each identical consumer P = 44 – Q. The…
A: In a monopoly market, there is only one seller or provider of a particular product or service,…
Q: Below is a graph of an individual firm in a perfectly (purely) competitive industry. Adjust the…
A: Long run profit maximization condition for a perfectly competitive firm is given as: => P = MR =…
Q: If the government imposes a price ceiling at $14, and the equilibrium price is at $10 in this…
A: A price ceiling refers to a government imposed most extreme price which can be charged for a good or…
Q: The figure below depicts the economy of Altrua, which is presently in equilibrium. Enter your…
A: The aggregate demand refers to the total demand for all the finished commodities produced in an…
Q: A graph showing the relationship between the price of a good and the amount of it that sellers are…
A: Supply curve is upward sloping showing positive relationship between price and quantity supplied.
Q: d. What will happen to the price and quantity of housing units if housing supply is very inelastic?…
A: The labor market refers to a place where demanders for labor, i.e., firms and suppliers of labor…
Q: If the utility function of an individual takes the form: U=U (x, y) = (3x+4)2 (2y + 5) where U is…
A: Given Utility function: U=U(x,y) =3x+422y+5 Here U denotes utility, x, and y are the quantities of…
Q: A supply curve for tomato production is given by Q = 35P - 5. Something causes the supply curve to…
A: Supply curve shows how much quantity is supplied by firms at a given price level.
Q: Andrea's Day Spa began to offer a relaxing aromatherapy treatment. The firm asks you how much to…
A: Total Revenue: TR = P.Q Marginal Revenue: MR = TRn - TRn-1 Average Cost: AC = TCQ Marginal Cost: MC…
Q: If firms have long-run average cost curves with a long, flat section, larger firms have a cost…
A: A long-run average cost refers to the average cost when all the factors of the production are…
Q: Calculate the consumer surplus for the demand function P= 300 - 3,2Q when the market price P = R83.…
A: The measure of the benefit or value that consumers receive from purchasing a product or service is…
Q: b. Now suppose the government guarantees milk producers a price of $2 per litre and promises to buy…
A: The government's regulation or legislation in the pricing of goods or services in an economy is…
Q: The table below details Student A's monthly purchases during 2019 and 2020. Answer the following…
A: Change in the index from 2019 to 2020 is = [(index 2020 - index 2019)/ index 2019]*100% Value of…
Q: Refer to the data provided in Table 11.2 below to answer the following question(s). Table 11.2…
A: When rate of return is less than the interest rate, the investment is not profitable because cost of…
Q: In a perfectly competitive market, MR = Instructions: In order to receive full credit, you must make…
A: By definition, MR = change in the total revenue due to 1 addition unit sold in the market => MR…
Q: The figure to the right shows the initial market supply (S₁) and market demand (D₁) curves for the…
A: Long-run average total cost (LRATC) refers to the average cost per unit of output in the long…
Q: Only typed answer and don't use chatgpt Management and a labor union are bargaining over how much…
A: .Given the strategies chosen by the other players, a Nash equilibrium is a condition in which…
need answer with expolanation no use
Step by step
Solved in 4 steps
- I need asnwers of f,g Assume there is consumer, his utility function is u(x,y) =8 * x0.5+y , and his budget constraint is px*x +y = m, which implies py = 1. a.Please derive the Marshallian demand function of x. b.Please derive the indirect utility function. c. Please derive the expenditure function If originally m = 40, px=2. d. What is his original highest utility level? Now px has decreased to 1, m and py do not change. e. What is his new maximum utility level? f. Based on (c) (d) and (e), what is his compensating variation? g.Based on (c) (d) and (e), what is his equivalent variation?I need asnwers of e,f,g Assume there is consumer, his utility function is u(x,y) =8 * x0.5+y , and his budget constraint is px*x +y = m, which implies py = 1. a.Please derive the Marshallian demand function of x. b.Please derive the indirect utility function. c. Please derive the expenditure function If originally m = 40, px=2. d. What is his original highest utility level? Now px has decreased to 1, m and py do not change. e. What is his new maximum utility level? f. Based on (c) (d) and (e), what is his compensating variation? g.Based on (c) (d) and (e), what is his equivalent variation?1.a Assume that a person’s utility function is given by the following function: ??=3?^(2/3)?^(1/3) Assume also that the price of X is £3, and the price of Y is £3 and that the budget is £45. What is the optimal amount of goods X and Y that should be purchased with this budget? b) Assume now that the price of good X is PD, while all other conditions remain the same. Find the optimal amount of good X that should be purchased for a generic price PD. In other words, find the individual demand function for good X. 1.b Assume now that the price of good X is PD, while all other conditions remain the same. Find the optimal amount of good X that should be purchased for a generic price PD. In other words, find the individual demand function for good X.
- Suppose David spends his income (I) on two goods, x and y, whose market prices are px and py, respectively. His preferences are represented by the utility function u(x, y) = lnx + 2lny (MUx = 1/x, MUy = 2/y). a. Derive his demand functions for x and y. Are they homogeneous in income and prices? b. Assuming I = $60 and px = $1, graph his demand curve for y. c. Repeat part (b) for the case in which px = $2.1. Think about a utility function U(x,y) =xy, the budget constraint is px*x +py*y= m. A. Please derive the expenditure function. If originally m = 8, px=1, py=4. Now px has increased to 2. B. Based on (A), after the price change, how much should be compensated to maintain his original utility level? C. Use the Shaphard's Lemma to derive the Hicksian demand functions.Hella the Greek's preferences can be described by the utility function U(x, y) = (x^1/2 + 3^1//2)^2. (a) What is the indifference curve for a utility of 49? (b) By how much does utility increase when Hella increases consumption of good y by one (small) unit, when initially U = 49 and x = 1? (c) Holding utility constant at 49, if initially x = 1, how many additional (small) units of y does Hella have to consume if her consumption of x drops by 6 (small) units?
- 2. Consider a consumer who purchases two goods, x and y. The consumer’s utility function is U(x, y) = xy. Assume initially that the consumer’s income is $160, the price of x is Px= $8, and the price of y is Py= $1.a) Find the utility maximizing bundle of x and y.b) Find the total utility at the utility maximizing bundle.c) Now assume the price of x decreases to $4. Re-compute the values from part a) at the new price.Assume, as in Exercise 22.1, that a consumer has utility function F or fruit and chocolate. Determine the consumer's demand functions q1(P1, P2, M) and q2(P1, P2, M). Determine also It* in terms of P1, P2 and M. Find the indirect utility function and show that It* = 8Vj8M. Suppose, as before, that fruit costs $1 per unit and chocolate $2 per unit. If the income is raised from $36 to $36.5, determine the precise value of the resulting change in the indirect utility function. Show that this is approximately equal to (O.5)λ*, where λ* is evaluated at P1 = 1,P2 = 2 and M = 36. Exercise 22.1 A consumer purchases quantities of two commodities, fruit and chocolate, each month. The consumer's utility function is For a bundle (X1, X2) of X1 units of fruit and X2 units of chocolate. The consumer has a total of $49 to spend on fruit and chocolate each month. Fruit cost $1 per unit and chocolate costs $2 per unit. How many units of each should the consumer buy…Given an individual’s current consumption patterns, we know that the person is consuming in such a manner that he is maximizing his satisfaction. Given a decrease in the price of one of the goods he normally purchases, what will happen to the consumer’s total satisfaction and to the marginal utilities connected with the consumption of this particular good. a) His overall satisfaction will increase, but his satisfaction from the last unit consumed of the good with a decreased price will decrease. b) His overall satisfaction will decrease and his satisfaction from the last unit consumed of the good with a decreased price will decrease. c) His overall satisfaction will increase and his satisfaction from the last unit consumed of the good with a decreased price will increase. d) His overall satisfaction will decrease and his satisfaction from the last unit consumed of the good with a decreased price will increase. e) We cannot tell about the changes in his total utility or his marginal…
- Q10. Consider a utility function: U (F,C) = FC so MU_F = C and MU_C = F. In Case 1, Total income is $100 , per unit prices of Food (F) are $2 , per unit prices of Cloth (C) are $10In Case 2, Total income is $100 , per unit prices of Food (F) are $2 , per unit prices of Cloth (C) are $15 Find the following for both cases, and contrast Case 2 with Case 1:a. What is the value of MRS at the optimal point and what does this value mean? b. What is the optimal consumption bundle i.e. (F*, C*)? c. Plot the budget line and clearly depict the point of optimality in the F (x-axis)-C (y-axis) space (draw both case budget lines and point of optimality on one diagram)33. Suppose MRSx,y = MUx/MUy = 0.1(a) If the consumer substitutes 10 units of X for one unit of Y, then the utility remainsunchanged(b) Regardless of prices, the consumer will only consume Y(c) If the consumer substitutes 1 unit of Y for 0.1 unit of X, then the utility remainsunchanged(d) Regardless of prices, the consumer will only consume X