A consumer spends all her income of £120 on the two goods A and B. Good A costs £10 a unit and good B costs £15. What combination of A and B will she purchase if her utility function is U = 4405B0.57
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- 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…2. Tom spends all his $100 weekly income on two goods, apples and bananas. His utility function is given by U (A, B) = AB, where A and B stand for the quantity of apples and bananas consumed by Tom. If PA = $4 and PB= $10, how many apples and bananas will he consume? Make sure you write out the utility maximization problem explicitly, including the decision variable(s). What if his utility function is given by U (A, B) = A0.5B 0.5?Khan lives in a world with two consumption goods x and y. Her utility function is U (x, y) = √x² + y². a. If px = $3,py = $4, and her income, I, is equal to $50, what will be the quantities of x and y that Maya should buy to maximize her utility? Make sure that you write out the Lagrangian and the first-order conditions. (Hint: It may be easier to maximize U² than U). Have you found a true maximum? Explain your answer.
- John has a utility function u(x,y)= min{0.5x,1.5y} , for baskets containing the goods x and y. What is John's utility if he consumes a basket where (x,y) = (20,8) ? a. 4.5 b. 8 c. 10 d. 12Steve's utility for socks (q1) and other goods (q2) is given by U(q1,q2) = 10q10.1 0.1q² 0.9 The price of the composite good is p2=1 and the price of a pair of socks is p1=2. Steve's income is Y=100. Every year, Steve's mom buys him 20 pairs of socks. How many dollars is the equivalent variation of the $40 that his mom spends on socks every year?Answer the question on the basis of the following two schedules, which show the amounts of additional satisfaction (marginal utility) that a consumer would get from successive quantities of products J and K. Units of J MUj Units of K MUk 1 56 1 32 2 48 2 28 3 32 3 24 4 24 4 20 5 20 5 12 6 16 6 10 7 12 7 8 If the consumer has money income of $52 and the prices of J and K are $8 and $4 respectively, the consumer will maximize her utility by purchasing Multiple Choice 3 units of J and 7 units of K. 5 units of J and 5 units of K. 4 units of J and 5 units of K. 6 units of J and 3 units of K.
- Assume an individual spends all of the their income on a bundle comprised of good #1 and good #2. In particular, their utility function is given by: U(q1,q2) = q12/3q21/3 Assume the price of good #1 is $1 (p1=1) and the price of good #2 is $3 (p2=3). What must the individual's income be if they maximize their utility by purchasing 10 units of good #1?Answer the question on the basis of the following two schedules, which show the amounts of additional satisfaction (marginal utility) that a consumer would get from successive quantities of products J and K. Units of J MUj Units of K MUk 1 56 1 32 2 48 2 28 3 32 3 24 4 24 4 20 5 20 5 12 6 16 6 10 7 12 7 8 What level of total utility is realized from the equilibrium combination of J and K, if the consumer has a money income of $28 and the prices of J and K are $8 and $4, respectively? Multiple Choice a. 172 utils b. 168 utils c. 188 utils d. 72 utils Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Assume that you have a budget of Taka 4000 that can spend on two goods like: coke and burger. Suppose coke costs Taka 100 per unit and burger costs 400 per unit. Suppose also that your utility function is given by the equation U(B, C) = 20BC. Write your budget equation. What combination of coke and burger should you buy to maximize utility?
- I. A)MRS=1/3, B)MRS=1/4, C)MRS=4/3, D)MRS=12 II. A)Rhea should buy more bread, less milk, B)Rhea should buy more milk, less bread, C) Rhea maximizes her utility at bundle A, so she should not change her consumptions of either good, D) Rhea cannot afford bundle A, so she should buy less of both goods III. A)Rhea's MRS at bundle A is greater than the price ratio (Pb/Pm), B)Changing her bundle moves Rhea to a higher indifference curve, C)The slope of the indifference curve (where bundle A is found) is not equal to the slope of Rhea's budget constraint, D)All of the above statements explain your answer to part II.Mr Banda faces the following utility function from consuming nshima [X] and Rice [Y] U = 3XY 1 3 Mr Banda’s budget allocation for nshima and rice is K240. The price of nshima is K60 per Kg while that of Rice is K20 per Kg. A. How much nshima and rice should Mr. Banda consume to maximize his utility and What is the total utility at the optimum? b. What is the Lagrange multiplier? c. What will be the increase in utility when the budget allocation is increased to K241?I need help with this homeowrk question i am unsure if i have it correct. Suppose a consumer’s utility function is given by U(X,Y) = X^1/2*Y^1/2. Also, the consumer has $36 to spend, and the price of good X is P(x) = $4. Let good Y be a “composite” good (good Y is the “numeraire”) whose price is P(y) = $1. So, on the Y-axis, we are graphing the amount of money that the consumer has available to spend on all other goods for any given value of X.if P(x) increases to 9 and the new bundle of the customers demands are 2 units of x and 18 units of y, how much additional money would the consumer need in order to have the same utility level after the price change as before the price change? (Note: this amount of additional money is called the Compensating Variation.) and of the total change in the quantity demanded of good X, how much is due to the substitution effect and how much is due to the income effect? (Note: since there is an increase in the price of good X, these values will be…
