Compute marys utility maximizing consumption bundle

Assignment Help Business Economics

Reference no: EM13734241

Suppose Mary’s utility function for two goods X and Y is given by: U(X,Y) = 2X1/2Y1/2

Suppose consumption bundle A consists of 10 units of X and 10 units of Y, and consumption bundle B consists of 20 units of X and 5 units of Y.

Consumption bundle A lies on a higher/lower/same indifference curve than consumption bundle B. Show computations.

Computed Mary’s MRSxy at consumption bundle A. What does this number tell you?

If Mary chose consumption bundle B, her MRSxy would be a higher or lower? Please explain why.

Mary’s preference is transitive. Could two of Mary’s IC’s intersect? Please explain using a graph below.

If Px = $4, Py = $5, and Income I = $200, compute Mary’s utility maximizing consumption bundle. Show the utility maximizing consumption bundle on a graph.

Reference no: EM13734241

Questions Cloud

Wages affect a competitive firms supply curve : If a perfectly competitive firm raises its price above the prevailing market rate, how much of its sales might it lose? Why? Can a competitive firm ever raise its prices? If so, when? How does an employer-paid Social Security tax on wages affect a co..

Supply and demand to address a predetermined goal : Use the principles of supply and demand to address a predetermined goal (set by you) in the gasoline market. Be clear on what the current market indicates and why and what your future goal is. We will probably revisit some of your choices in future m..

Perfectly competitive business maximizes profit by producing : A perfectly competitive business maximizes profit by producing at a rate where ________.

The market supply curve slopes upward : The market supply curve slopes upward because:

Compute marys utility maximizing consumption bundle : Suppose Mary’s utility function for two goods X and Y is given by: U(X,Y) = 2X1/2Y1/2. Suppose consumption bundle A consists of 10 units of X and 10 units of Y, and consumption bundle B consists of 20 units of X and 5 units of Y. Consumption bundle A..

Short-run price elasticity of the supply of gasoline : Suppose that the short-run price elasticity of the supply of gasoline is 1.6. If the price falls by 5%, the quantity supplied will change by _________.

Created each month to keep unemployment from increasing : If the labor force of 150 million people is growing by 1.4 percent per year, how many new jobs have to be created each month to keep unemployment from increasing?

What is the market clearing bertrand price and quantity : Two firms compete in an undifferentiated Bertrand market. Suppose that the firms face a demand curve given by P = 60 – Q and both firms have constant marginal cost of 40. What is the market clearing Bertrand price and quantity?

What empirical method generally is used to measure : What empirical method generally is used to measure the degree to which products substitute for each other?

User Account

All Pages