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Suppose a consumer's utility function is given by U(X,Y) = X*Y.
Therefore;
MUx=Y
MUy=X
Also, the consumer has $36 to spend, and the price of X, PX = 9, and the price of Y, PY = 2.
A) How much X and Y should the consumer purchase in order to maximize her utility?
B) How much total utility does the consumer receive?
C) Now suppose PX decreases to 1. What is the new bundle of X and Y that the consumer will demand?
D) How much money would the consumer need in order to have the same utility level after the price change as before the price change?
E) Of the total change in the quantity demanded of X, how much is due to the substitution effect and how much is due to the income effect?
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Elucidate this linkage in words also after that illustrate with a Cumulative Demand - Cumulative Supply diagram.
A large company in the communication and publishing industry has quantified the relationship between the price of one of its products and the demand for this product as Price = 150- 0.01 x Demand for an annual printing of this particular product.
What is the meaning of a surplus or deficit on the a) merchandise trade balance, b) goods and services balance, and c) current account balance?
The rapid globalization of capital markets enables persons also institutions based in one nation to invest in corporations based elsewhere with relative ease.
If Congress engages in contractionary fiscal policy, we can expect that
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