Utility function U(X,Y)=(x^(3/4))(Y^(1/4)) 1)Suppose Px=2, Py=1, and Income is 100. What are the new levels of demand for X and Y? 2) Digrammatically show  the income and substitution effect from 3 to 2 on the consumption of x. You must explicitly specify the optimal consumption bundles for the different sets of prices (appropriatly graph and label actual quantities) but you may qualitatively specify anything else deemed relevant. 3)Which effect (substitution or income) will move you along a given indifference curve? And for this question, do you move to the left or right along the given indifference curve and does this increase of decrese MRS. Also, explicitly specify what the MRS is equal to before and after you move along the indiferrence curve.

Question

Utility function U(X,Y)=(x^(3/4))(Y^(1/4))

1)Suppose Px=2, Py=1, and Income is 100. What are the new levels of demand for X and Y?

2) Digrammatically show  the income and substitution effect from 3 to 2 on the consumption of x. You must explicitly specify the optimal consumption bundles for the different sets of prices (appropriatly graph and label actual quantities) but you may qualitatively specify anything else deemed relevant.

3)Which effect (substitution or income) will move you along a given indifference curve? And for this question, do you move to the left or right along the given indifference curve and does this increase of decrese MRS. Also, explicitly specify what the MRS is equal to before and after you move along the indiferrence curve. 

Expert Answer

1 Rating

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Economics

Consumer demand theory

Related Economics Q&A

Find answers to questions asked by students like you.

Q: Suppose the California legislature passed a sweeping law to lower the number of regulations for buil...

A: Click to see the answer

Q: Economics Question

A: Given Information-U(X,Y)= 10X2YPX=$40 PY=$10   M=$1500Where,PX is price of good X, i.e., Blue-ray di...

Q: What is number 7a-7d? I'm confused

A: George has charged at a $34 to each customer on account of marginal revenue ($18) that would exceed ...

Q: A survey shows an increase in drug use by young people. In the ensuing debate, two hypotheses are pr...

A: The correct answer to the above-mentioned question is that the difference between the two explanatio...

Q: Consider the product of gasoline. Its PES is estimated at 1.6. Which of the following would be true?...

A: (1) If the price elasticity of supply is 1.6 means, the price elasticity of supply is elastic. That ...

Q: d. What was nominal GDP, real GDP, and the GDP deflator for 2011? Show your work. e. What was the in...

A: (a) The cost of a basket of goods is the sum of the product of the price and quantity consumed of ea...

Q: List and explain 4 types of transactions that would not be included in GDP and why they should be om...

A: Hey, Thank you for the question. According to our policy we can only answer 1 question per session. ...

Q: [Indifference Curves] Consider the utility function U(C1, C2) and B 1 In(C1)BIn(C2) 1. Using a progr...

A:  The given equation is : U=ln(C1) + Bln(C2)We know, ln(C1) + ln(C2) = ln(C1*C2)

Q: Now, consider an economy in which the demand for money is of the formY(1 + it)for t = 0, 1, 2, · · ·...

A: Given: M= Y/(1+it)Y= 150, it= nominal interest rate in period t, real interest rate = 4%

Q: Why does the movie theater charge matinee customers a lower price than the night time customers?

A: The movie theater charge matinee customers a lower price than the nighttime customers because the sm...

Q: Diseconomies of scale occur when:A) average total cost increases as output increases.B) average tota...

A: The process of production is the combining of the raw materials and the skills and knowledge of the ...

Q: Why is bank run contagious?

A: The word contagious refers to a cause that will have an impact over others where as the term bank ru...

Q: Your bank account pays an interest rate of 4 percent. You are considering buying a share of stock in...

A: Answer - Given in the question - Interest rate =  4%Price of stock XYZ = $110dividend = $5We have to...

Q: Consider the following population in our sample town. a) How many people in this population accordin...

A: Answer -  By the definition of  Unemployment - A person is defined as unemployed if  they are jobles...

Q: Indicate how each of the following events would affect the aggregate demand AD curve:     a short-...

A: Investment and consumption are positively related to output as seen in equation 1. So, if keeping ot...

Q: Northside Social (NS) sells cups of coffee and amazing breakfast sandwiches. The current price of a ...

A: The firm sells 1000 units of cup of coffee and 200 units of breakfast sandwiches in the market at th...

Q: Question 26 Consider the firm whose MC, AC, AVC, AFC functions are shown in the following graph. (Th...

A: The Marginal cost, Average cost, Average Variable cost and Average fixed cost curves of the firm are...

Q: Based on the impact of a drop in the discount rate on the supply of money in the market. select an e...

A: Money supply: It is the total stock of money in circulation at a point in time and the money supply ...

Q: 1. Consider the market for used textbooks. Use  Exhibit A-5 to calculate the total producer surplus....

A: Since we answer only one question at a time, we will answer the first question. Kindly upload the ot...

Q: elaborate 2 main components of money based on the narrowest definition of money

A: Narrowest definition money or M1 refers to the sum of currency held with the public, demand deposits...

Q: Consider a simple economy that produces two goods: pens and erasers. The following table shows the p...

A: Nominal GDP is the market value of all final goods and services produced by a nation at the current ...

Q: the second part of the question

A: Answer - Given in the question - Jhones and  Smith decided to allocate $1000 per Year as entertainme...

Q: Suppose that the aggregate demand and aggregate supply schedules for a hypothetical economy are as s...

A: Real GDP demanded can be plotted against price level as shown below with price level on y-axis and R...

Q: Consider an economy in which the demand for money is of the formMt =(1/v) PtYfor t = 0, 1, 2, · · · ...

A: Given: Mt= (1/v) PtYY= 150, v= 1.5, Money supply = 100 for t=0,1

Q: 9.Fiscal policy can be called on to correct conditions of recession and inflation.  a.List and expla...

A: Click to see the answer

Q: Do less developed countries where large batteries for vehicles are produced show any indications of ...

A: The less developed countries do not have proper arrangement for the disposable of electric waste and...

Q: Using the aggregate demand and aggregate supply model, explain the effects of the following on price...

A: 1.Consumers are worried with the country’s economic progress. In this case, it indicates that they a...

Q: A farmer grows wheat, which she sells to a miller for $100. The miller turns the wheat into flour, w...

A: (a)GDP can be depicted as the final market value of all the finished goods & services in an econ...

Q: What countries currently use the EURO?

A: To determine the countries that use euro as their currency.

Q: Draw a graph and complete a short-run cost table by using the information provided.       (TP)   (TF...

A: In the short run, a firm will have two types of cost: fixed cost and variable cost.Total fixed cost ...

Q: If the MPS rises, then the MPC will: a. Fall b. Rise c. Stay the same In what direction will each ...

A: We are authorized to answer one question at a time, since you have not mentioned which question you ...

Q: At quantities less than the long-run minimum cost per unit of output, the long run average total cos...

A: At quantities less than the long-run minimum cost per unit of output that is quantities less than Q ...

Q: How is comparative advantage related to early American production?

A: A country has a comparative advantage at producing something if the country can produce it at lower ...

Q: Why do rich people have a higher marginal propensity to save than poor people?

A: In economics, the term marginal propensity to save (MPS) depicts the proportion of aggregate raise i...

Q: Consider a firm whose production function is f(L,K)=ALaKb. Denote by APL(L,K)=f(L,K)/L the so-called...

A: The production function is given as;

Q: Do you expect that China, then India, will follow the growth paths of Japan and South Kora? What fac...

A: Economic growth of a country is the increase in the inflation-adjusted price value of goods and serv...

Q: Suppose the price of gasoline increases 10% and quantity of gasoline demanded in Orlando drops 5% pe...

A: The elasticity of demand is the responsiveness from the part of the consumer towards the price chang...

Q: An web designer quits a project where she was paid $50,000 on completion of the project. She joins a...

A: Economic Profit:Economic profit refers to the profit which obtained by subtracting the opportunity c...

Q: What are some of the major trading regions?

A: To identify some of the major trading regions.

Q: at job group(Occupation) was the smallest among immigrants? Why do you think so few people from that...

A: The immigrants from various parts of the world started to flow towards the US economy in search of t...

Q: suppose that at a price index of 154 the quantity demand of u.s. real GDP is 10.0 trillion worth of ...

A: Aggregate demand is expressed as the combinations of total demand for finished goods and services th...

Q: 5. LO 4 Suppose, as in the federal income tax code for the United States, that the representative co...

A: Case 1In the first case when consumers do not pay taxes earlier, a reduction in tax deduction can ha...

Q: If the short-run aggregate supply curve (SRAS) is horizontal, then an increase in aggregate demand l...

A: The correct option for the above-mentioned question is (c).

Q: 1.Using a relevant diagram, illustrate and discuss the Ricardo-Barro Effect 2. Using relevant diagra...

A: Ricardo-Barro Effect or Ricardian equivalence is an economic theory stating that a change in tax rat...

Q: Find the optimal solution for the following problem.       Maximize C = 4x + 12y subject to 3...

A: Click to see the answer

Q: Explain on the impact of a drop in the discount rate on the supply of money in the market

A: Discount rate or bank rate is the rate at which the central bank give money to the commercial bank. ...

Q: What is the difference between total and marginal product?     Total product is the output pro...

A: To determine the difference between Total Product (TP) and Marginal Product (MP).

Q: Why might economists be quite concerned if the annual interest payments on the U.S. public debt shar...

A: If the annual interest payments on debt increased sharply, government spending on debt will increase...

Q: One of the assumptions of classical theory of international trade is constant returns to scale but m...

A: Answer- One of the assumption of classical theory of international trade is constant to scale but mo...