Bina is a rational consumer who purchases two products: comic books (good X) and action hero...
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Bina is a rational consumer who purchases two products: comic books (good X) and action hero t-shirts (good Y). Bina's income (budget) is $400 per period, the market price of a comic book (Px) is $10, and the price of a t-shirt (Py) is $20. a. b. C. Suppose Bina's tastes and preferences are defined by the following Cobb- Douglas utility function: U = 5X0.5 y0.5 Given the information on income, prices and utility, determine and illustrate graphically the utility-maximizing combination of comic books and t-shirts for this consumer (be sure to show an indifference curve sketch and budget line in your diagram). Determine and illustrate the new equilibrium combination if the price of comic books (good X) increases to $20. Use may use separate diagrams for parts a. and b. (or use a single diagram). Specify and determine the demand equation for good X (no graph is necessary). Explain if the demand function for good X is consistent with the utility-maximizing outcomes from parts a. and b. Bina is a rational consumer who purchases two products: comic books (good X) and action hero t-shirts (good Y). Bina's income (budget) is $400 per period, the market price of a comic book (Px) is $10, and the price of a t-shirt (Py) is $20. a. b. C. Suppose Bina's tastes and preferences are defined by the following Cobb- Douglas utility function: U = 5X0.5 y0.5 Given the information on income, prices and utility, determine and illustrate graphically the utility-maximizing combination of comic books and t-shirts for this consumer (be sure to show an indifference curve sketch and budget line in your diagram). Determine and illustrate the new equilibrium combination if the price of comic books (good X) increases to $20. Use may use separate diagrams for parts a. and b. (or use a single diagram). Specify and determine the demand equation for good X (no graph is necessary). Explain if the demand function for good X is consistent with the utility-maximizing outcomes from parts a. and b.
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Related Book For
Financial Management Principles and Applications
ISBN: 978-0134417219
13th edition
Authors: Sheridan Titman, Arthur J. Keown, John H. Martin
Posted Date:
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