Question: The utility function is U = x + y a. Find the utility-maximizing consumption bundle when income is 120 and P x = 1 and

The utility function is U = x + y

a. Find the utility-maximizing consumption bundle when income is 120 and Px= 1 and Py=2

b. Suppose that income remains 120 and Px remains 1 but Py decreases to (3/2). What is the utility-maximizing consumption bundle?

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:

You are a wine collector and have $600 to spend to fill a small wine cellar. You enjoy two vintages in particular a French Bordeux priced at $40 per bottle and a less expensive California blend...

Q:

\documentclass{article} \usepackage{amsmath} \usepackage{amssymb} \begin{document} \textbf{Question A} Consider an household that has consumption set $\mathbb{R}_L^+$ and complete, transitive,...

Q:

1. The following question refers to a model of imperfect monopsonistic wage discrimination against females like the one presented in class. a) Indicate how imperfect monopsonistic wage discrimination...

Q:

preferably the mathematical equations should be proper, as I find it difficult to understand if done normally by a keyboard. 1209 PM Tue 29 Sep ?1100%- B doc-OO-cOappsviewergoogleusercontentcom...

Q:

Lucy consumes only scoops of ice cream (x) and cones (y). Moreover, she insists on consuming these two goods in the combination of 1 scoop of ice cream and 1 cone. If there are more scoops of ice...

Q:

Robert's utility function is U (x, y) = 2px + y. In every graph for this question, set y in the vertical axis and x in the horizontal axis. (a)Obtain the marginal rate of substitution MRS. Obtain the...

Q:

4. In its most abstract (though still very simple) form, we can write our model of individual choice as subject to P1331 +P2332 + ' ' ' +Pn33n S I. Let us rst examine the role of the budget...

Q:

Let's say the price of beer (X) is Px, the price of chicken (Y) is Py, and income is M. And In the utility function that represents the preferences of a consumer standard IU u = u (x, y) Let's say...

Q:

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...

Q:

A consumer has the indifference map shown below. The market prices of X and Y are $24 and $8, respectively. The consumer has $120 to spend on goods X and Y. a. Construct the consumer?s budget line...

Q:

On January 1, a company issued 7%, 15-year bonds with a face amount of $90 million for $82,218,585 to yield 8%. Interest is paid semiannually. What was interest expense at the effective interest rate...

Q:

When given the rate of markup, describe at least one situation that leads to adding the rate to 100%. Describe at least one situation that leads to subtracting the rate from 100%.

Q:

What does the term "compounding" refer to in the context of time value of money?

Q:

Assume that you are a city manager, and you are concerned about reports of problematic interactions between police and members of minority groups in a neighboring city. From time to time, residents...

Q:

7. How can an interpreter influence the utterer (sender)?

Q:

9. Find a news article in a daily newspaper written by a journalist. How is this news article related to: (a) The writers expertise? (b) The context? (c) The personal characteristics of the writer?...

Q:

8. How can an interpreter influence the message?