Question: Question Three (8 Marks) Lulu has a utility function of U(X, Y) = (X0'4Y0-6) for goods X and Y. Assume that she is a utility

Question Three (8 Marks) Lulu has a utility function of U(X, Y) = (X0'4Y0-6) for goods X and Y. Assume that she is a utility maximising consumer who spends all of her weekly budget of $1 8 on goods X and/0r Y. T he price of good X is $1.40, while the price of good Y is $1.60. (a) Calculate Lulu's best affordable bundle. (b) Prove that the bundle you calculated in (a) above is affordable. (c) Explain What happens to Lulu's marginal rate of substitution as you move down her indifference curve? As part of your answer, explain What marginal rate of substitution means

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!

Please help! Below are three independent lease scenarios. Payments are made at the beginning of each year. Case 1 Case 2 Case 3 Fair value of equipment $ 160,000 $ 95,000 $ 125,000 Unguaranteed...

This is about consumer theory in microeconomics. Please show all your workings and explanations and answers. Please answer all parts Question Three (8 Marks) Lulu has a utility function of U(X, Y) =...

8 5:38 Assignment - M... Q . . . MOI UNIVERSITY ECO 210: INTERMEDIATE MICROECOMICS 1 : ASSIGNMENT INSRUCTIONS: ANSWER ALL QUESTIONS a) Clearly identify any three main variables that affect the...

Please answer all questions with explanations Consumer Choice Model 1. Elizabeth has the following utility function for goods X and Y: U =X Y. Her income is $300 per unit of time, the price of X...

Lulu has a utility function of U(X,Y) = (5X + 3Y) for goods X and Y. Assume that she is a utility maximising consumer who spends all of her weekly budget of $18 on goods X and/or Y. The price of good...

GO THROUGH THESE AND HELP ME SOLVE.... MICRO ECONOMICS WORKS 1. Question 5 (Choice) Mrs. Gordon has 3 sons. She spends $1013 on each boy during the holiday season to buy them chocolate and gummy...

QUESTION TWO QUESTION ONE a) Consider an investor whose preferences are represented by the following utility function u(x) -In (2x), for x>0, where x denotes wealth, which is a realization of a...

Question one. 3 An Anticipated Output Shock [30 points] Consider a two-period small open endowment economy populated by a large number of households with preferences described by the lifetime utility...

This is the question 12127 .I 2* Cl 8 coursehero.com Econ 33 1 0 Dr. Deza Fall 2016 Problem Set #1 QUESTION 1: True/False. Please indicate whether each statement is true or false and justify your...

Determine mesh currents in the circuit Determine the mesh currents in the circuit of Fig. 3.88. 20 n 30 N 10 n ww ww ww 30N 12 V 6 V 8 V

Consider a 3-year bond from which you receive three coupon payments (C), one at the end of every year. The face value of the bond F is received at the end of year 3. Write the formula for the price P...

The obligation for health educators to provide service to all citizens is based primarily upon which ethical principle? Justice Nonmaleficence Honesty Value of life

A stream of air enters a 7.50-cm ID pipe at a velocity of 60.0 m/s at 27C and 1.80 bar (gauge). At a point downstream, the air flows through a 5.00 cm ID pipe at 60C and 1.53bar (gauge). What is the...

Obviously, we can make rockets to go very fast, but what is a reasonable top speed? Assume that a rocket is fired from rest at a space station in deep space, where gravity is negligible. (a) If the...

A very long electrical conductor 10 mm in diameter is concentric with a cooled cylindrical tube 50 mm in diameter whose surface is diffuse and gray with an emissivity of 0.9 and temperature of 27C....

A helicopter is flying with a constant horizontal velocity of 90 mi/h and is directly above point A when a loose part begins to fall. The part lands 6.5 s later at point B on an inclined surface....

A sale of merchandise on account for $13,750 is subject to an 8% sales tax. (a) Should the sales tax be recorded at the time of sale or when payment is received? (b) What is the amount of the sale?...

03. The an A shop copy shop ruses $123,000 of a particulel inte for printers year. ownee estimates the ordering cost to be $45 and thinks that they can hold this type of Inventory at of 22% of the...

2. In this chapter, the reader should reflect on the following concepts: feedback and flexibility as a basis for change, intention and communication as a basis for change and behavioural patterns as...

Always have the dignity of the other or others as a backdrop.

1. There are two purposes in this chapter. The first is to break out of habits that have a limiting effect on ones own ability to change. Secondly, it is to understand how the cleaning affects the...