1. A consumer consumes two commodities, x and y. The consumer has utility function U (x,...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
1. A consumer consumes two commodities, x and y. The consumer has utility function U (x, y) = (x - A)² y and faces the budget constraint pxx + pyy = m. The shift parameter A is age. a) Find the Marshallian demands for both goods. b) How does the optimal consumption of both goods change with age? Explain. c) Find the indirect utility as a function of prices and income. d) Find the marginal utility of money as a function of prices and age e) What happens to U (x,y) as the individual ages? f) Provide an example for goods x and y that may be represented by this utility function. Explain your answer. 1. A consumer consumes two commodities, x and y. The consumer has utility function U (x, y) = (x - A)² y and faces the budget constraint pxx + pyy = m. The shift parameter A is age. a) Find the Marshallian demands for both goods. b) How does the optimal consumption of both goods change with age? Explain. c) Find the indirect utility as a function of prices and income. d) Find the marginal utility of money as a function of prices and age e) What happens to U (x,y) as the individual ages? f) Provide an example for goods x and y that may be represented by this utility function. Explain your answer.
Expert Answer:
Answer rating: 100% (QA)
Find the Marshallian demands for both goods x 2 y 2Axy A 2 y m p x x p y y 3 focs x 2xy 2Ay A 2 Y p ... View the full answer
Related Book For
Managerial Economics Foundations of Business Analysis and Strategy
ISBN: 978-0078021718
11th edition
Authors: Christopher Thomas, S. Charles Maurice
Posted Date:
Students also viewed these mathematics questions
-
Assume that a consumer consumes two commodities X and Y and makes five combinations for the two commodities: TABLE GIVEN BELOW Combination Units of X Units of Y A 25 3 B 20 5 C 16 10 D 13 18 E 11 28...
-
3. (a) Suppose a consumer consumes two commodities X and Y. To be on the same utility level, the consumer is always willing to give up exactly 3 units of Y for an additional unit of X. Price of X is...
-
Provide an example of a form of security that should be maintained over each of physical and electronic working papers.
-
Simplify each expression in Problems 722. Classify each answer by number of terms and degree. 3(x5) 2(x + 8)
-
Given the following accounts, tell whether the normal balance of each account is a debit (DR) or a credit (CR): 1. ___________ Supplies 2. ___________ Insurance expense 3. ___________ Income tax...
-
(a) Given the stretching frequencies for the CH bonds shown in color, arrange the corresponding bonds in order of increasing strength. Explain your reasoning. (b) If the bond dissociation energy of...
-
Discuss the major problems with acquisitions. Why are acquisitions often less suitable for entrepreneurial firms?
-
Softkin Company manufactures sun protection lotion. The Mixing Department, the first process department, mixes the chemicals required for the repellant. The following data are for the current year:...
-
Comparative financial statement data for Carmono Company follow: Assets Cash This Year Last Year $ 8.00 $ 15.00 Accounts receivable Inventory Total current assets Property, plant, and equipment Less...
-
Atwater Chemicals produces an engine additive for machinery. The additive is produced by adding various ingredients to a petroleum-based lubricant. Atwater purchases the lubricant from two suppliers,...
-
You are considering an investment project that will provide the following receipts/ disbursements. You will pay $5,000 immediately and receive $2000 each year for three years, starting two years from...
-
Being culturally competent is essential in providing quality care. When caring for a person with Autism, what are two cultural considerations to incorporate into this care?
-
Discuss your thoughts on the legal guidelines regarding ethical health issues.
-
Prepare the journal entries to record the following sales transactions in Blue Spruce Corp.'s books. Blue Spruce uses a perpetual inventory system. (List all debit entries before credit entries....
-
Which motivation theory suggests that employees are motivated by a sense of accomplishment and personal growth?
-
In a tug-of-war game on one campus, 15 students pull on a rope at both ends in an effort to displace the central knot to one side or the other. Two students pull with force 198 N each to the right,...
-
Describe the marketing environment Starbucks faces in South Africa! This includes 'painting' a picture of the (a) economic landscape, (b) offer basic consumer facts, (c) describe the political and...
-
In exchange for land, the company received a 12-month note on January 1. The face amount of the note is $1,000, and the stated rate of interest is 13%, compounded annually. The 13% rate is equal to...
-
Twentyfirst Century Electronics has discovered a theft problem at its warehouse and has decided to hire security guards. The firm wants to hire the optimal number of security guards. The following...
-
During the summer of 2009 at the European Unions headquarters in Brussels, dairy farmers across Europe protested low milk prices caused by the EUs move away from farm crop subsidy programs toward...
-
EZ Sharp Industries, Inc., manufactures the Keen Edge line of diamond-abrasive cutlery sharpeners for home use. EZ Sharp holds a patent on its unique design and can earn substantial economic profit...
-
A thin stainless steel disk of thickness \(b\) and outer radius \(r_{o}\) has been heat treated to a high, uniform initial temperature of \(T_{i}\). The disk is then placed upon a small stand and...
-
A power transistor mounted on a finned heat sink can be modeled as a spatially isothermal object with internal heat generation and an external convection resistance. (a) Consider such a system of...
-
Steel balls \(10 \mathrm{~mm}\) in diameter are annealed by heating to \(1150 \mathrm{~K}\) and then slowly cooling to \(450 \mathrm{~K}\) in an air environment for which \(T_{\infty}=325...
Study smarter with the SolutionInn App