Substitution and income effects in units, Macroeconomics

Assignment Help:

Individual A has UA(XA,YA)=lnXA+2YA and has $500. PX=5 and PY =10.

(a) Find the optimum. Show that it is indeed the maximum.

(b) PX=10. Find the new optimum.

(c) Calculate the substitution and income effects in units of Y associated with this change in price.

(d) Graph your answers in (a), (b) and (c) on the same graph.


Related Discussions:- Substitution and income effects in units

Energy supply, What happens to the extraction path if the choke price falls...

What happens to the extraction path if the choke price falls

Banking system, how is credit creation by commercial bank

how is credit creation by commercial bank

Same Basket of Goods, assume the cost of a market basket in 2008 is 1717.0....

assume the cost of a market basket in 2008 is 1717.0. Calculate the cost of the same basket of goods and services in 2007. Price index in 2008 was 100 and price index in 2007 was

Explain the consumer prices index, Consumer Prices Index Two economic ...

Consumer Prices Index Two economic indices learnt at AS are the Consumer Prices Index (CPI) and the Retail Prices Index (RPI). Both are used to calculate the average price lev

Velocity of money is constant, Suppose that this year's the money supply is...

Suppose that this year's the money supply is $500 billion, nominal GDP is $10 trillion, and real GDP is $5trillion. a. What is the price level? b. What is the velocity of money

Estimated profit of typical start-up businesses, Typical start-up businesse...

Typical start-up businesses' estimated profit are forecasted as following: State Bad Good Probability 81% 21%

Find out the expected return on capital, Butthole Industries is buying out ...

Butthole Industries is buying out Avengers, Inc.  Butthole and Avengers both have market capitalizations equal to their fair value or the present value of their net cash flows.  Bu

Increase in income, How does an increase in income affect a consumer's budg...

How does an increase in income affect a consumer's budget line and their total utility?

Money, how to calculate the ultimate change in deposits and credit?

how to calculate the ultimate change in deposits and credit?

Indiana toll road at the rate of two per minute, Automobiles arrive at the ...

Automobiles arrive at the Elkhart exit of the Indiana Toll Road at the rate of two per minute. The distribution of arrivals approximates a Poisson distribution. A) What is the prob

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd