Maximize the utility function U=X0.6 Y0.25 subject to budget constraint 680 = 8X + 5Y Also show that above utility function is homogenous and homothetic.
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Maximize the utility function
U=X0.6 Y0.25 subject to budget constraint
680 = 8X + 5Y Also show that above utility function is homogenous and homothetic.
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- Utility Maximization A consumer faces income constraints and has CES preferences of the following form: U(x, y)= x y Are these preferences homothetic? Explain why or why not.alculate the marginal rate of substitution (MRS12) for the following utility function: U(q1,q2)= 60q1+ 0.2(q2)2 What is the value of MRS12 at bundle (4, 3)?Explain why the lifetime budget constraint must be satisfied as a strict equality
- . Show that Cobb-Douglas preferences are homothetic preferencesJane receives utility from days spent traveling on vacation domestically (D) and days spent traveling on vacation in a foreign country (F), as given by the utility function U(D,F) = 10DF. In addition, the price of a day spent traveling domestically is $100, the price of a day spent traveling in a foreign country is $400, and Jane’s annual travel budget is $4000. Suppose F is on the horizontal axis and D is on the vertical axis. Jane's marginal rate of substitution between F and D is equal to 10 1 F/D D/FGiven the utility function, where U is the total utility and x and y are the commodities consumed, find the marginal utility function of each of the two commodities.
- Given the following Cobb Douglas Utility function u(x1, x2) = x1cx2d.What is Marginal Rate of Substitution MRS x1, x2 ?Consider a couple whose behaviour follows the unitary household model. Their preferences can be represented by the utility function: U(CM; CH) = min (CM, CH), where CM, denotes market goods and CH denotes home production. Each spouse can work up to 50 hours per week, and those 50 hours can be divided between market work and home production. Joe and Anna are each paid £20 per hour for market work. Joe produces £20 of home production per hour, while Anna produces £30 per hour of home production. (a)How many hours are each of the spouses allocating to home production and market work? and Suppose that Anna is offered a pay raise, so that her hourly market wage increases to £25, and nothing else changes. Will that change the identity of the spouse who works more hours on the market? Explain your answer.In many cases, it is reasonable to refer to the ________________ as the price Group of answer choices budget constraint sunk cost opportunity cost marginal utility
- Consider the following utility function U(X,Y) = 2X + 3Y PX,PY, and I are exogenous. (a) What is the demand function for X? (b) What is the demand function for Y?Evaluate the one specific law which states that the marginal utility of a good orservice declines as more of the good or service is consumed in a specific timeperiod.Elaborate substitution effect in case of inferior goods.
