1. If pA = $10, PB = $5,Y = $75, where p is the price of...

 

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1. If pA = $10, PB = $5,Y = $75, where p is the price of a good, A and B are goods, and Y is income. Given that the utility function is U = 25A²B, determine the optimal bundle of x and yfor this consumer. Be sure to show your work and box your answers. a) Solve for the marginal utility of A and the marginal utility of B b) Solve for the relationship (trade-off) between A and B c) Solve for the budget constraint (also called budget line) d) Solve for the optimal bundle (A,B) e) Graph the entire budget line BL, the optimal bundle, and the indifference curve I. Put A on the x-axis, and B on the y-axis. Be sure to label all points, axis, curves, intercepts, and the optimal bundle. Note: the indifference curve need only show the point at which it intersects the budget line, and otherwise be drawn as a general indifference curve- no need to plot points for the indifference curve) 1. If pA = $10, PB = $5,Y = $75, where p is the price of a good, A and B are goods, and Y is income. Given that the utility function is U = 25A²B, determine the optimal bundle of x and yfor this consumer. Be sure to show your work and box your answers. a) Solve for the marginal utility of A and the marginal utility of B b) Solve for the relationship (trade-off) between A and B c) Solve for the budget constraint (also called budget line) d) Solve for the optimal bundle (A,B) e) Graph the entire budget line BL, the optimal bundle, and the indifference curve I. Put A on the x-axis, and B on the y-axis. Be sure to label all points, axis, curves, intercepts, and the optimal bundle. Note: the indifference curve need only show the point at which it intersects the budget line, and otherwise be drawn as a general indifference curve- no need to plot points for the indifference curve)

Answer rating: 100% (QA)

a To solve for the marginal utility of A and the marginal utility of B we need to find the first par... View the full answer