Question: Justin has the utility function U = xy , with the marginal utilities MUx = y and MUy = x . The price of x

Justin has the utility function U = xy, with the marginal utilities MUx= y and MUy= x. The price of x is $2, the price of y is py, and his income is 40. When he maximizes utility subject to his budget constraint, he purchases 5 units of y.

(a)What must be the price of y and the amount of x consumed?

(b)Prove that this allocation follows the equi-marginal principle

(c)What would be the new bundles of x, y if Px was $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 Economics Questions!

Q:

Question 1 Suppose that the quantity of corn supplied depends on the price of corn (P) and the amount of rainfall (R). The demand for corn depends on the price of corn and the level of disposable...

Q:

Justin has the utility function U = xy , with the marginal utilities MUx = y and MUy = x . The price of x is $2, the price of y is p y , and his income is 40. When he maximizes utility subject to his...

Q:

Justin has the utility function U = xy, with the marginal utilities MUx = y and MUy = x. The price of x is 2, the price of y is py, and his income is 40. When he maximizes utility subject to his...

Q:

Justin has the utility function U = xy , with the marginal utilities MUx = y and MUy = x . The price of x is $2, the price of y is p y , and his income is 40. When he maximizes utility subject to his...

Q:

Justin has the utility function U = xy , with the marginal utilities MUx = y and MUy = x . The price of x is $2, the price of y is p y , and his income is 40. When he maximizes utility subject to his...

Q:

1.Justin has the utility function U = xy, with the marginal utilities MUx = y and MUy = x. The price of x is 2, the price of y is py, and his income is 40. When he maximizes utility subject to his...

Q:

May I please get some help on this problem? All the information provided is included in the screen shot. Hi there is nothin more to add to this question. That is all that is available in the...

Q:

Part A Practical Questions Question 1 (5 marks) Suppose that the quantity of corn supplied depends on the price of corn (P) and the amount of rainfall (R). The demand for corn depends on the price of...

Q:

Question 2 (5 marks) Justin has the utility function U = egg, with the marginal utilities WMUng = y and MU}; = x. The price of x is $2, the price of y is 1:33, and his income is 40. When he maximizes...

Q:

Question 2 (5 marks) Justin has the utility function U = egg, with the marginal utilities WMUng = y and MU}; = x. The price of x is $2, the price of y is 1:33, and his income is 40. When he maximizes...

Q:

Simplify each of the following. (2r) 4722 (2

Q:

Empresas Semana Santa presents the following information as of December 31, 2021: Preferred stock, 2%, $20 value per 150,000 issued and outstanding shares $3,000,000 Common stock, $10 par value,...

Q:

How did technology-enhanced production help the company achieve its goals for financial performance? For customer service? For growth or expansion?

Q:

6) has been described as an intense positive emotion, which allows entrepreneurs to be motivated and stimulated to overcome obstacles and focus on their goals. Habit Passion Creativity Development...

Q:

12. Think of a situation where you felt particularly powerless. It must be a real event that you remember relatively well. Try to think back. What was it you imagined just before you felt powerless...

Q:

13. Try to imagine how you would feel if you had tackled the problem, the con-flict, the challenge, etc., that made you powerless in task 12, for example upstairs, confident, confident, calm,...

Q:

15. Ask yourself the following questions: What do you want to remember from your everyday experiences? These are the experiences that fill most of your life. They may take 9099% of your time. What do...