Calculate out the numbers of consumption of x when y=4

Reference no: EM13911570

Ann consumes two goods X and Y, his utility function is U(X, Y ) = 2XY 2. Suppose the price of X is $10, while the price of Y is $15. Ann's income is $500.

(a) Write the expression for indifference curve when Ann gets utility level 40. And along the indifference curve you found, calculate out the numbers of consumption of X when Y=4.

(b) Write the expression for Ann's budget constraint, graph the budget constraint and determine its slope.

(c) Determine the X, Y combination which maximizes Ann's utility, given her budget constraint. And figure out what's marginal rate of substitution (MRS) between two goods at that maximization point.

Reference no: EM13911570

Questions Cloud

Shareholders as the annual dividend : Michael's, Inc. just paid $1.85 to its shareholders as the annual dividend. Simultaneously, the company announced that future dividends will be increasing by 4.10 percent. If you require a rate of return of 8.3 percent, how much are you willing to pa..

New chemical vapor depositor in order to make silicon chips : Cameron Industries is purchasing a new chemical vapor depositor in order to make silicon chips. It will cost $6 million to buy the machine and $10,000 to have it delivered and installed. The machine is expected to have a working life of six years. Sa..

Present value calculation capital lease : At the time the lease was signed, the interest rate for a 10 year loan was 12%.

Continuously compounded risk-free interest rate is r : Assume the Black-Scholes framework. The continuously compounded risk-free interest rate is r is unknown, but for a non-dividend paying stock S we know: Calculate r

Calculate out the numbers of consumption of x when y=4 : Write the expression for indifference curve when Ann gets utility level 40. And along the indifference curve you found, calculate out the numbers of consumption of X when Y=4.

Assume both portfolios-What must be the risk-free rate : Assume both portfolios A and B are well diversified, that E(rA) = 12.4% and E(rB) = 13.2%. If the economy has only one factor, and βA = 1 while βB = 1.1, What must be the risk-free rate?

What is the profit or loss associated with copper : Landmark Coal operates a mine. During July, the company obtained 500 tons of ore, which yielded 250 pounds of gold and 62,500 pounds of copper. The joint cost related to the operation was $500,000. Gold sells for $325 per ounce and copper sells for $..

Present value calculations : Present value calculations. Using a present value table, your calculator, or a computer program present value function, answer the following questions:

Discounting approach to the modified internal rate of return : Blue Water Systems is analyzing a project with the following cash flows. The cash flows, in order, are -$236,000 (initial cost), $137,400 (year 1 CF), $189,300 (year 2 CF) and -$25,000 (year 3 CF). Should this project be accepted based on the discoun..

User Account

All Pages