Find the quantities of essential and luxury goods

Assignment Help Business Economics

Reference no: EM131389712

The Smith Family’s utility function is given by U = 7 ln x + 13 ln y,

Where U is their monthly utility, x is the quantity of essential goods that they consume per month and y is the quantity of luxury goods that they consume per month. The average price per unit of essential goods is px = $10 and the average cost per unit of luxury goods is py = $30. Find the quantities of essential and luxury goods that the Smith family should consume per month to maximize their utility, given that their monthly budget for these goods is B = $3600. What is their maximum utility? Be sure to justify your claim that the utility you find is the absolute maximum.

Reference no: EM131389712

Questions Cloud

What is labor-elasticity of output when monthly labor input : The short-run production function of ACME Widgets Inc. is given by q = 40(2L − 8)^(3/4, where q is the number of Widgets ACME produces in a month, and ` is ACME’s monthly labor input, measured in $1000’s. Find ACME’s labor-elasticity of output as a f..

Options for gathering marketing research : Primary marketing research is generally used when all other options for gathering marketing research have been exhausted. It is very expensive, and sometimes the research itself is flawed in its design.

Is sutton released from his liability : Prior to the due date of the loan, Perry convinced Campbell to return the stock because its value had increased and he wished to sell it to realize the gain. Campbell released the stock and Perry subsequently defaulted. Is Sutton released from his..

Social media awareness : Recommend at least one (1) way a business with which you are familiar could use social media / buzz marketing to increase sales and awareness (e.g., social media awareness) of your products.

Find the quantities of essential and luxury goods : Where U is their monthly utility, x is the quantity of essential goods that they consume per month and y is the quantity of luxury goods that they consume per month. Find the quantities of essential and luxury goods that the Smith family should consu..

What are simpsons rights : Pamela Darden owed Clark $50,000 on an unsecured loan.- What are Clark's rights?- What are Simpson's rights?

Develop and implement lead generation programs : Marketing is often required to develop and implement lead generation programs to identify "qualified" leads for the sales organization. You have been charged with developing a lead generation program for a new office park. The office park is locat..

Does sinclair have any valid defense against carlton : Upon Sinclair's commitment to act as surety, Carlton loaned Patrick the $100,000. After one payment of $4,000, Patrick defaulted. He then filed a voluntary petition in bankruptcy. Does Sinclair have any valid defense against Carlton?

Firm output given an annual production budget : Where Q is the firm’s annual output, K is the firm’s capital input and L is the firm’s labor input. The price per unit of capital is pk = 10000 and the price per unit of labor is pl = 5000. Find the levels of capital and labor input that maximize the..

User Account

All Pages