Question: *7. A consumers utility function is given by U = XY, where M U X = Y and M U Y = X. a. What

*7. A consumer’s utility function is given by U = XY, where M U X = Y and M U Y = X.

a. What is the utility derived from 1 unit of X and 2 units of Y ? What is the utility derived from 2 units of X and 1 unit of Y ? What is the utility derived from 5 units of X and 2 units of Y ?

b. How does the consumer rank the following bundles?

Quantity Quantity Bundle of X of Y A 2 2 B 10

c. Graph an indifference curve that shows the bundles of X and Y for which U = 6 and U = 8. Is the “more is better” assumption satisfied for X and Y ?

d. What are M U X and M U Y for the following bundles?

0 C 1 5 D 3 2 E 2 3

e. Does MU X diminish, stay constant, or increase as X increases? (Hint: You must keep the values of all other variables fixed.)

Quantity Quantity Bundle of X of Y A 2 2 B 10 0 C 1 5 D 3 2 E 2 3

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Microeconomics Questions!

#7. A consumer's utility function is given by U = XY. where MU x = Y and MUY = X a. What is the utility derived from 1 unit of X and 2 units of Y? What is the utility derived from 2 units of X and 1...

QUESTIONS: ;Solve all the problems. 1.Wha Problems (Soluband to problems mariged * appear at the burck al this book. Problems adapted to one calculon is availabin grains it 1. Which assumption about...

Problems (Solusand to problemis mariged * appear at the bock of this book. Problems adapted to one calculus in availabit saint at 1. Which assumption about consumer preferences does by three...

.Solve the following questions. (1) The force of interest changes from moment to moment according to the formula ?t = 0.10e 0.012t . You invest $ 1,000 at time 0. Find the accumulated value at time...

.Solve the following this question is complete. (1 point) The average cost per item to produce q items is given by a(q) = 0.02972 1.2g + 28, for q > 0. What is the total cost, C(q), of producing q...

Question 2 (20 Marks). a) A bond with a coupon rate of 7% makes semi-annual coupon payments on January 15 and July 15 of each year. The Wall Street Journal reports the ask price for the bond on...

.Solve the following with clear answers. Question Part 1: In class we built the IS-LM model using graphical representations. Below see if you can derive the formation of the model algebraically: C =...

.Solve these questions. Beaker 0.002 M NaSCN 0.200 M Fe(NOg)3 Equal in 0.1M HNOg (mL) In 0.1 M HINOg (mL) 0.1 M HNO (mL] 0.0 0.1 2.5 2.5 7.5 0.2 2.5 7.4 0.4 2.5 7.3 0.6 2.5 7.1 0.8 2.5 6.8 1.0 2.5...

A consumers utility function is given by U = XY, where M UX = Y and M UY = X. a. What is the utility derived from 1 unit of X and 2 units of Y? What is the utility derived from 2 units of X and 1...

Please solve these three questions related to microeconomics course step by step and with explanation Question #1 Two students studying microeconomics are trying to understand why the tangent...

The tensile stress-strain behavior of pure aluminum is shown in graphs following. Determine the following properties for pure Al. a) Youngs modulus, b) 0.2% offset yield strength, c) tensile...

If n is not a positive integer or zero, the binomial expansion of (1+y)n yields, for1

Paula documented the following figures for her company: Gross Sales = $75,000 Sales Discounts = $3,500 Freight-in = $4,500 Sales Returns and Allowances = $6,750 The Net Sales for Paula's company is...