Question: suppose an individual's utility function is U(x,y) = sqrt(x) + 2 * sqrt(y) and her total budget is $90. the price of y is always

suppose an individual's utility function is U(x,y) = sqrt(x) + 2 * sqrt(y) and her total budget is $90. the price of y is always $1 but the price of x drops from $1 to 50 cents. calculate the effect on x and the income effect on y.

answer choices:

a. SE = +32X; IE = +10Y

b. SE = +32X; IE = -22Y

c. SE = +18X; IE = -22Y

d. SE = +18X; IE = +10Y

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!

COBECON Term 2 AY 2021-2022 Problem Set 2 (50 pts) Instructions: 1. Problem sets are to be submitted individually but you can answer with your classmates. It is advisable that you work on the problem...

same quesions 2. There are two goods, food and clothing, whose quantities are denoted by x and y and prices by px and py, respectively. There is a consumer whose income is denoted by I and utility by...

hh tackle the following Suppose an individual has utility function u : R2+ R where u(x1, x2) = x1 + 4x2 Assume p1, p2 > 0 and that the consumer's income is y. (a) Find the individual's Marshallian...

37. This question is a sequel to Question 35 from Problem Set #9. So you don't have to look it up, the following table shows prices and corresponding estimates of quantity demanded for a firm's...

QUESTION 21 1. The slope of a consumer's indifference curve represents A. the tradeoff in the market between the two goods. B. the tradeoff in the consumer's mind betwen the two goods. C. the total...

PROBLEM 1 has been answered by a brillaint teacher HERE. KINDLY ANSWER PROBLEM 2 THIS PROBLEM IS 100% ACCURATE AND THERE IS NO MISSING DATA. Problem 1: Optimizing Demand Health care goods cost $10....

1.Is the statement true or false? Try to correct it with the options given if possible: Cobb-Douglas preferences and perfectly complementary preferences are also homothetic preferences. a.True as is....

1. In the market of cars, there are two firms operating. The Industry Demand Curve is a function of the outputs being produced by both firms, and is given as: P = 240(X1+X2), where X1 and X2 are the...

Tim consumes haircuts (1) and sandwiches (x2). His utility function is: u (x1, x2) = (x1) (x2)1-0 The price of x1 is p and the price of x2 is p2. He has a total income of m. 1. Find Tim's demand...

9. Suppose an individual's utility function is U = x 2 + y, and her total budget is $48. The price of y is always $8, but the price of x increases from $1 to $2. Calculate the substitution effect on...

A 1400-kg sports car accelerates from rest to 95 km/h in 7.4s. What is the average power delivered by the engine?

A box contains 30 red balls, 30 white balls, and 30 blue balls. If 10 balls are selected at random, without replacement, what is the probability that at least one color will be missing from the...

MC . 0 1 - 0 0 5 Funds are provided to the initial issuer of securities in the a . secondary market. b . primary market. c . surplus market. d . deficit market.

Consider the following information: State Probability Stock A Stock B Stock C Boom 0.65 0.09 0.04 0.03 Bust 0.35 -0.15 0.22 -0.03 What is the expected return on an equally weighted portfolio of these...

A good negotiation tactic is to not make unilateral concessions during negotiations. Instead, experts advise that you should figure out the other sides hidden agenda, devise an alternative if you...

Why has Negotiating Women, Inc. focused its attention on women?

What are the underlying ethical issues surrounding womens networking and mentorship?