Suppose that your utility from pens (x) and notebooks (y) is given by U=xy+10x Your income is 80$, the price per pen is 30$ and the price per notebook is 10$. What are the optimal (utility maximizing) values of pens and notebooks?

Suppose that your utility from pens (x) and notebooks (y) is given by U=xy+10x Your income is 80$, the price per pen is 30$ and the price per notebook is 10$. What are the optimal (utility maximizing) values of pens and notebooks?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter6: Consumer Choices

Section: Chapter Questions

Problem 9RQ: If people do not have a complete mental picture of total utility for every level of consumption, how...

See similar textbooks

Related questions

Q: Market constraint Hourly wage of workers in the industry The number of other firms selling similar…

A: A constraint restricts or prohibits the success of a particular production procedure. According to…

Q: Solve the following question with complete solution (do not use excel) and include cash flow diagram…

A: According to the question, it is given that : Maintenance cost for small bridge with an expected…

Q: The following graph shows the aggregate demand curve (AD), the short-run aggregate supply curve…

A: The aggregate demand (AD) curve depicts the inverse relationship between the price level and…

Q: "Import quotas on capital- intensive industrial goods and subsidies for the import of capital…

A: In order to safeguard indigenous industries and generate manufacturing jobs in emerging nations,…

Q: Assume the annual interest rate on a British pound-denominated asset maturing in 90 days is 7.5…

A: The value of one currency with respect to another is referred to as the exchange rate. It refers to…

Q: suppose that you deposit 8000 in your bank and the required reserve ration is 15 percent the maximum…

A: You deposit 8000 in your bank account. The required reserve ratio is 15 percent.

Q: Worldwide quarterly sales of a brand of cell phones were approximately q = −p + 156 million phones…

A: This question is rely on the idea of equilibrium price. Knowing the situation of equilibrium price…

Q: Instruction: Solve the Nominal and Effective Interest rates and add your conclusion on the problem.…

A: The interest rate quoted on a loan or investment is known as the nominal interest rate since it does…

Q: A monopolist faces a market inverse demand function: P = 250 – 5Q and marginal cost function: ATC =…

A: In contrast to a competitive market, where there are many sellers and buyers, a monopolist has the…

Q: Ryan deposited P2,000, P2,500 and P3,000 at the end of the 2nd year, 3rd year and 4th year,…

A: Present value is the value of investment in today's dollar. Future value is the value of investment…

Q: if the required reserve ratio is 2 percent then the simple deposit multiplier is Enter a whole…

A: Reserve are the mandatory part of deposit that is kept by the banks as per the rules of central…

Q: Now assume that both firms are in the market and they choose quantities to supply. Assume also that,…

A: Markup refers to the amount added by a firm to the cost of a product to arrive at the selling price.…

Q: 10 9 8 7 6 5 4 3 2 0 100 200 300 400 500 600 700 800 900 1000 Producers earn $ The figure shows the…

A: Demand is the willingness to purchase a product in the market and the affordability of a person to…

Q: Suppose a manufacturer sells to a retailer of its product. Final market demand for the product is…

A: A monopoly is a firm that is the single seller of its good, and where there is no close…

Q: Suppose money demand depends on disposable income, so that the equation for the money market becomes…

A: Money Market Equilibrium : LM relation => M/P = L (r , Y- T ) Goods market equilibrium : IS…

Q: Two firms, Sludge Oil and Northwest Lumber, have access to five production processes, each one of…

A: Process (Sm A(4 tons/day) B(3 tons/day) c(2 tons/day) d(1 tons/day) e(0 tons/day) cost to sludge…

Q: Use the following information to create a standard cost card for production of one photography drone…

A: Cost is the sum of the resources—including time, money, materials, and labor—used to create a good…

Q: Currency Demand deposits Money market funds other checkable deposits Savings deposits Small time…

A: In billion of dollars Currency 89 Demand deposits 86 Money market Funds 47 other…

Q: Solve the following question with complete solution and include cash flow diagram in handwritten…

A: Present value is the value of investment in today's dollar. Future value is the value of investment…

Q: Compare and contrast the monopoly and oligopoly market .

A: A market is a system where buyers and sellers can trade commodities, services, or other valuables.…

Q: The Lorenz curve A) has non-decreasing gradient B) cannot have straight line segments C) none of the…

A: Lorenz curve refers to a graph showing the variance of the size in income distribution from perfect…

Q: Sword Properties in Knoxville, TN built a shopping center at a cost $50M in year 2010. The company…

A: Depreciation can be termed as a fall in the cost of assets that are fixed due to constant use of it.…

Q: Contractionary fiscal Devaluation

A: Wanted to make domestic industries more competitive but did not want to alter aggregate income. with…

Q: Governments often require people to obtain insurance; for example, all drivers are required to carry…

A: An insurance requirement statement is the piece of a business policy wherein the types and minimum…

Q: The following table indicates the unit prices (in Rands) and quantities of three goods purchased…

A: Index numbers are quantitative indicators that show how price and quantity vary over time. Economic…

Q: The production function of a firm is f(x, y) = x + y. The marginal product of input x diminishes…

A: The production function shows the relationship between the input used and the output produced. The…

Q: The price of crude oil increased to its highest level due to conditions which impacted supply.…

A: OPEC (Organization of the Petroleum Exporting Countries) is an international organization that was…

Q: Cournot model: linear demand; identical firms. Q(P)=D-P TC(C)=cQ, where D>c a) Suppose that there…

A: The Cournot model is an economic model used to analyze the behavior of firms in a duopoly,…

Q: Identify the most likely type of causal relationship for the two situations below, and explain why.…

A: Cause and effect relation: When one event leads to the other event such as the independent variable…

Q: Label the aggregate demand-aggregate supply model in long-run equilibrium.

A: The short run refers to a period when the wages and few other prices are sticky. On the other hand…

Q: Solve the following question with complete solution and include cash flow diagram in handwritten…

A: According to the question, it is given that : Maintenance Cost = $15000 for 7 years Expenditure…

Q: Please write one page about the following question: Is the rebound effect real? provide one…

A: The rebound effect is a phenomena in which rising demand or consumption partially or totally…

Q: Nu Things, Inc., is considering an investment in a business venture with the following anticipated…

A: The amount of money that flows in any business through the incoming and outgoing process is…

Q: riefly outline how each of the following theories explain the shape of the yield curve. A. Liquidity…

A: Economics refers to the study of scarcity and its implications for the use of given resources,…

Q: Leonora has the utility function u(x, y) = 4x - y^2 a.Draw the indifference curve for a utility…

A: U(x, y) = 4x - y2 MRS = MUxMUy = 42y Hence the slope of the indifference curve is 2/y

Q: Suppose the Federal Reserve sets the reserve requirement at 10%, banks hold no excess reserves, and…

A: The money multiplier refers to the potential increase in the money supply that can be generated by…

Q: Maintenance cost for small bridge with an expected 50 year life are estimated to be $15,000 each…

A: Maintenance cost for small bridge with an expected 50 year life are estimated to be $15,000 each…

Q: A smartphone repair firm in Boston has a production function for producing phone repairs, q, defined…

A: The production function represents the relationship between the output and inputs. The change in…

Q: BC Junction purchased some embroidering equipment for their Denver facility 3 years ago for $15,000.…

A: MACRS (Modified Accelerated Cost Recovery System) is a method of depreciation used for tax purposes…

Q: Some economist argued that globalization and international trade affect the domestic producers in a…

A: The term "globalization" describes how economies, civilizations, and cultures are intertwined and…

Q: Which statement is correct? The Census Bureau surveys both businesses and households to measure…

A: Unemployment is the term used for when a person is willing to work in the market at the prevailing…

Q: B- In the previously selected combination of goods ( item A), draw-up the budget line (oranges on…

A: Consumer theory is the study of how people allocate funds depending on their personal preferences…

Q: 1. Explain the relationship between the bond market and the economy. 2: Explain what is the bond…

A: “Since you have posted multiple questions with multiple sub parts, we will provide the solution only…

Q: A firm has the production function X = LK (X = output, L = labour, K = capital); labour and capital…

A: Production is a critical component of economics as it adds value to the economy by putting labor to…

Q: What is the present equivalent of a uniform series of quarterly payments of $4,500 each for 6 years…

A: Given: Interest rate = 8% compounded bimonthly Quarterly payments @ $4,500 each quarter for 6 years…

Q: Can increasing individual income tax rates alone help reduce the national debt? Explain. A. No,…

A: The entire sum of money that a government owes to its creditors—which might be people,…

Q: Please i really want an explained answer, new one not copy paste. Or else i down vote. A company…

A: A few years ago, the cost of the tube = was 10. The market price of pipe = 9.

Q: 11. In 1790, Thomas Malthus 3.0 suggested as the population grew, we would run out of food. 2.5 This…

A: The graph suggests that we are keeping pace with the demand of food and rise in population

Q: Using a Supply-Demand diagram, explain how each of the following events will affect the market of…

A: Demand curve shows an inverse relationship between price and quantity demanded where as supply…

Q: As you have seen, public budgeting is inherently political. Indeed, it is driven by an acutely…

A: The government's choices and actions regarding the collecting of taxes and the distribution of…

Question

4. Suppose that your utility from pens (x) and notebooks (y) is given by
U=xy+10x
Your income is 80$, the price per pen is 30$ and the price per notebook is 10$.
What are the optimal (utility maximizing) values of pens and notebooks?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Utility function and budget constraint:

VIEW

Step 2: Optimal quantity:

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Would you expect marginal utility to rise or fall with additional consumption of a good? Why?
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.
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
If people do not have a complete mental picture of total utility for every level of consumption, how can they find their utility-maximizing consumption choice?
Would you expect total utility to rise or fall with additional consumption of a good? Why?
10) Suppose that the utility function of an individual can be described as U(X,Y) = 4X +2Y. For this utility function the MRSA) is always X*YB) is always constantC) is always X/YD) is always X+YE) is always X-Y.
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?
3. Assuming a price of X (Px) and a price of Y (Py) are $ 1 each, the individual's income is $ 8 per time period and all of it is spent. The Schedule Utility Marginal for items X and Y for individuals is: Specify : a. How should this individual spend his income in order to maximize total utility? b. What is the total amount of utility received by an individual when it is in equilibrium?
#10. Assume that Thomas can afford to buy as many candy bars and ice cream cones as he wants. He would continue to consume both candy bars and ice cream until the a. marginal utility of each decreases. b. marginal utility of each becomes negative. c. total utility of each becomes negative. d. marginal utility of candy bars and ice cream bars is equal. e. total utility of candy bars and ice cream bars is equal.
1. Suppose that a consumer’s utility function for two goods (X and Y) is U(X,Y) = 10X^0.5 + 2Y , with MUx = 5X-0.5 and MUy = 2. The price of good X is $5 per unit, the price of good Y is $10 per unit, and the income is $275. a. Find the utility maximizing quantities of X and Y. b. If instead, the price of good Y is $20 per unit, how does your answer change?