Calculate ilkkas utility-maximizing purchases of x and y

Assignment Help Econometrics

Reference no: EM13245965

Ilkka's income is $120 and he spends it on two goods, X and Y. His utility function is U = XY. Both X and Y sells for $2 per unit.

(a) Calculate Ilkka's utility-maximizing purchases of X and Y.

(b) How will his utility change if his income decreases by $2.00?

(c) If the price of X increased by 44%, with no change in the price of Y, by how much would his income have to increase to enable him to maintain his initial level of utility (as in part (a) above?

Reference no: EM13245965

Questions Cloud

What is firms total cost equal to if fulfils the contract : Suppose a firm produces widgets on two assembly lines and operates with the following Total Cost function: TC = 3x*2 + 6y*2 - xy Where x represents the number of widgets produced on one assembly line and y the production on the second.

Determine the per-unit amount of both externalities : A local drama company proposes a new neighborhood theater in San Francisco. Before approving the building permit, the city planner completes a study of the theater's impact on the surrounding community.

Extrinsic variable by position type : Identify the significance level, the test statistic, and the critical value, state whether you are rejecting or failing to reject the null hypothesis statement and explain how the results could be used by the manager of the company.

What is the dollar value of the deadweight loss when output : What is the dollar value of the deadweight loss when output level Q3 is produced? What is the dollar value of the total surplus when output level Q3 is produced?

Calculate ilkkas utility-maximizing purchases of x and y : Ilkka's income is $120 and he spends it on two goods, X and Y. His utility function is U = XY. Both X and Y sells for $2 per unit. (a) Calculate Ilkka's utility-maximizing purchases of X and Y. (b) How will his utility change if his income decreases..

What is the tax liability on the sale of the truck : Suppose the Quick Towing Company purchases a new tow truck. The old truck had a book value of $1,000 and was sold for $1,420. If Quick Towing is in the 34 percent marginal tax bracket, what is the tax liability on the sale of the truck? What is the a..

What is marginal utility of money equal at lower income : An individual lives in a world where there are only two goods, X and Y. His utility function per period is given by: U = 25x - 0.5x^2 + 50y - y^2 The price of x is $4 and the price of y is $8.What is his marginal utility of money equal to at this l..

Find the npv and pi of a project that costs : Find the NPV and PI of a project that costs $1,500 and returns $800 in year 1 and $850 in year 2. Assume the project's cost of capital is 8 percent.

Calculate the total energy stored in the capacitors : Two capacitors, of 3.2 and 4.8?F capacitance, are connected in parallel across a 300 V potential difference. Calculate the total energy stored in the capacitors

User Account

All Pages