Question: Suppose the utility function of the consumer is given by U = min{2X, 5Y } and the budget constraint of the consumer is given by

Suppose the utility function of the consumer is given by U = min{2X, 5Y } and the budget constraint of the consumer is given by 7.5X+10Y = 300. Find the utility miximizing consumption and the maximum utility of the consumer? How will the utility miximizing consumption and the maximum utility of the consumer change if the government decides to impose a 10% sales tax on both commodities?

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!

Suppose the utility function of the consumer is given by U = AXY = 5X0.4Y 0.5 such that X 0 and Y 0. The budget constraint of the consumer is given by 500 8X +10Y. All monetary values are measured in...

Suppose the utility function of the consumer is given by U = AXY = 5X0.3Y 0.6 such that X 0 and Y 0. The budget constraint of the consumer is given by 800 10X + 8Y . All monetary values are measured...

Suppose the utility function of the consumer is given by U = min{4X, 6Y } and the budget constraint of the consumer is given by 10X +12Y = 500. Find the utility miximizing consumption and the maximum...

Suppose the utility function of the consumer is given by U = 2X+3Y and the budget constraint of the consumer is given by 10X + 7Y = 140. Find the utility miximizing consumption and the maximum...

Efficient Taxation of 'Diamond' Goods (Ng, AER, 1987) Consider a consumer who derives utility from three consumption goods: x and y and z, which prices are given, respectively, by x y z p , p and p ....

Suppose the utility function of the consumer is given byU=AXY= 5X0.3Y0.6such thatX0 andY0. The budget constraint of the consumer is given by 80010X+8Y. All monetary values are measured in dollars....

If you are unable to answer all parts. Simply do parts 1-3. Thanks Question I [40 points] A representative consumer living in a Country A values consuming goods (C) and enjoys leisure (l). The...

QUESTION 26: Consumer's Problem (16 marks) In the Alonso-Muth-Mills Model, assume that the consumer utility function is Cobb-Douglas and is given by: U = c./3q2/3 where q is consumption of floor...

Suppose the utility function of a consumer is U=X a Y b where X and Y are respectively the quantity of commodities X and Y, and a and b are positive constraints such that a + b=1. When U is...

Define gross domestic product. Determine whether each of the following would be included in the 2007 U.S. gross domestic product: Profits earned by Ford Motor Company in 2007 on automobile production...

In a study of people first getting acquainted with each other, researchers examined the amount of self-disclosure of one's partner and one's liking for one's partner. Here are the results: Partner's...

4.31 Determine v x in the circuit of Fig. 4.99 using source transformation. 12 V 3 ww + Vx 21 2vx 8

Use the following information Waxman of California and Markey of Massachusetts proposed a law to limit greenhouse gas emissions from electricity generation and require electricity producers to...

At the end of 2022, the following information is available for Great Adventures. Additional interest for five months needs to be accrued on the $33,200, 6% loan obtained on August 1, 2021. Recall...

The Pediatric Department of Emory Hospital operates as an individual business unit. The department rents space and beds from Emory Hospital, and accordingly receives charges related to janitorial,...

Among a group of 5 8 programmers, who know either Java or Python or both, 1 5 only know Java and 1 3 only know Python. What is the probability of randomly choosing a programmer who knows both...

11. Based on the following rules regarding the confidence we have in information in a communication context, find examples from your everyday life where the rules have relevance: (a) The spatial rule...

2. Describe a situation from your own everyday life where it is clear that the situation in its consequence becomes the way you define it.

5. What do we mean when we say that social facts are mental constructions? Explain this with an example from your own everyday life.