Question: Now, consider a consumer that has a CES utility function. Let = = 1 and = 0.5: U=U(x,y)=(x 0.5 +y 0.5 ) 2 Assume that

Now, consider a consumer that has a CES utility function. Let = = 1 and = 0.5:

U=U(x,y)=(x0.5+y0.5)2

Assume that U is measured in utils and x and y are measured in units.

(a) Find the equation for the indifference curve for U= 400 for this utility function.

(b) Find the formula for the MRS for this utility function.

(c) Consider two points on this indifference curve: x= 1 and x=16 Find the MRS at each of these points.

(d) Interpret the MRS at x = 16.Be specific.

(e) Does this indifference curve take the typical shape? Explain how you know.

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:

Now, consider a consumer that has a CES utility function. Let = = 1 and = 0.5: U=U(x,y)=(x 0.5 +y 0.5 ) 2 Assume that U is measured in utils and x and y are measured in units. (a) Find the equation...

Q:

Clearly answer the following questions,,, 1. Suppose a fair, two-sided coin is flipped. If it comes up heads you receive $5. If it comes up tails you lose $1. The expected value of this lottery is...

Q:

Hello, please help with the following questions (25-29). The first image is there for reference a Andreoni-Miller preferences and a Dictator Game Consider a dictator game in which the price of giving...

Q:

Question 1 (3.5 points) Ming spends her entire weekly budget M > 0 on candy bars (x) and comic books ()). If she spends all of M, she can buy: . 4 candy bars and 4 comic books . 5 candy bars and 2...

Q:

Question 1 (3.5 points) Ming Spends her entire weekly budget M > 0 on candy bars (x) and comic books (y). If she spends all of M, she can buy: 0 4 candy bars and 4 comic books 0 5 candy bars and 2...

Q:

ECO670...... 1. "Deriving the Envelope Thoerem: Consider the more general problem M(o, ) = max, f(x, a, 8) subject to g(r, a, 8) = 0. Show that: dM(a, B) _ Of(x', a, b) ag(x*, a, b) da da da 2. For...

Q:

Please use the attachment for guidance. Complete each of the following economic problems. Problem A Use the national income data in the table below to compute the following: GDP. NDP. NI....

Q:

give all Problem 1. Demand Bengt's utility function is U(x1, x2)= x1 + ln x2 x1 - stamps x2 - beer Bengts budget p1 x1 + p2 x2 = m p1 - price of stamps p2 - price of beer m - Bengt's budget a) What...

Q:

ans7 The Consumer Price Index (CPI) is one of the most used indexes to measure the change in prices. Of concern is the increase in prices - inflation. Inflation has many harmful effects on the...

Q:

All the questions Exercise #1. A firm produces output using the technology y = 7 1.000 where capital, K, is measured in machine-hours, labor, L, is measured in person-hours, and y denotes the yearly...

Q:

The following table gives the average patient waiting time in minutes for patients from a random sample of 16 physicians, classified by type of practice and type of physician a. Classify each factor...

Q:

Your line manager, Ahmed, has sent you the following email late on Wednesday just as you are about to finalize your timesheet and head to a monthly tax-update webinar: From: Ahmed Sent: Wednesday, 16...

Q:

Fred has been allotted 200 1 ordinary shares in Ark Ltd with a nominal value of 1 and a premium of 0.40 pence. Fred has paid 0.85 pence. What is Freds maximum liability if the company is wound up? A...

Q:

please answer it within 4-5 sentence. Which government agency should take the lead on regulating open banking

Q:

1. Discuss the following statements: (a) A circle becomes a straight line when viewed on a very small scale. (b) Breaking patterns creates change.

Q:

2. Develop your own loop models for the following conditions. At least one model shall be developed for each of the points under (a-j) a) If A shows anger towards B, what will Bs reaction be? b) What...

Q:

1. To gain an understanding of the fact that relationships are something more than only cause and effect chains.