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- 8. Suppose U= xx and our budget is given as p₁x₁+P2x₂ = m, where m is our income. Solve for solve for x and x₂.Question 2 David spends his budget on chocolate and chip. His utility function is given by ?(?1,?2)= 2?1?2, where ?1 is the number of chocolates he consumers per week, and ?2 is the number of chips he buys per week. A chocolate costs 10 SEK, and a chip costs 20 SEK. David’s weekly budge for consuming on these two goods is 120 SEK. (1) What is David’s budge line? Draw the budget line on a graph with chocolate amounts on the horizontal axis and chip amounts on the vertical axis. Write explicitly at which points budget line crosses the axis. (2) What is David’s marginal utilities for the two goods, respectively? What is his marginal rate of substitution between the two goods? (3) What is David’s optimal choice? Calculate the numerical answer for the optimal bundle. Also draw an indifference curve for David on the same graph as question(1) and show the optimal bundle.9. Suppose now we want to minimize our expenditure while achieving a certain amount of utility. So say our budget is given as P₁x₁ + P2x2, which we want to minimize, while our utility x and x₂ = u, where u is the level of utility we would like to achieve. Solve for xi and x₂.
- Assume that a person's vitility function is given Assume by the following function. TU = 2x¹¹2,¹/2 also that the price of x is 22 and the price of is 26 and that the budget is 2240. what is the optimal amount of goods x and that should be purchused with this budget? of y у5. Suppose the representative consumer has the (quasilinear) utility function: U(x, y) = ax + In(v) where x,y are consumption goods. Denominated in US dollars, the prices of x and y Pi and pz, respectively. (a) What does the term quasilinear mean? Is consumption of x independent of y? (b) Assume the consumer has a budget of C dollars at his/her disposal. What is the maximum utility the consumer may achieve with this budget? (c) What is the minimum expenditure if the consumer wants to derive U,units of utility?= x 2 y. This Consider a consumer with the utility function U (x, y) = Vxy 글3글2-iy and MU, Vx = x? They have 1 function gives MU Va a budget of $60, and pr 1 and Py 2. Find optimal consumption of x and y.
- 1. Think about a utility function U(x,y) =xy, the budget constraint is px*x +py*y= m. m = 8, px=1, py=4. a. What is his optimal consumption? b. What is his maximum utility level? Now px has increased to 2. c. Based on expenditure function, after the price change, how much should be compensated to maintain his original utility level?VI. Utility Maximization 3. Consider an individual with the following utility function, U(x, x2) = ax5x95. The current price %3D of x, is 2 and the current price of x, is 4. 1. What is this consumer's budget constraint? 2. Calculate the optimal consumption of x, and x, if the consumer has income m.A consumer has an annual budget constraint for two goods: “housing sq. ft." and "$ for everything else". Draw the budget constraint for this consumer if income (v) = $50,000 and price per sq. ft. of housing, ph, is S200. Please be sure to fully label your graph (i.e., slope, intercept, etc.). Note: plot "housing sq. ft." on the x-axis. How would this consumer's budget line change if she received a $5,000 raise and the price of housing increased to $250? Include a graph with your answer. How did the economic rate of substitution (ERS) between housing and $ for everything else change when pa changed? Please interpret the ERS both before and after the price change.
- Question 6 Burritos 9 8 7 6 5 4 3 2 1 1 3 4 5 6 7 Assume Kerri's budget constraint is represented in the graph shown. If Kerri's income to spend on these two items increases, her budget constraint will: shift in, maintaining the same slope. shift out and become flatter. shift out and become steeper. shift out, maintaining the same slope. OOOO Salads 2Carlos is buying salad and pizza for a company lunch. Suppose that a bowl of salad costs $4.00, and a slice of pizza costs $2.00. Let E be the amount in dollars that Carlos spends on salad and pizza. If Carlos buys S bowls of salad and P slices of pizza, then the total amount of money he spends (E) can be represented by the equation Now rearrange the equation you wrote above so that P is written in terms of E and S. The quantity of pizza he buys can be represented by the equation Suppose Carlos has $40.00 to spend on salad and pizza; that is, E = $40.00. Complete the following table with the values of S or P that make the equation true. Hint: To complete the first row, determine the number of pizza slices Carlos can purchase with $40.00, when the number of salad bowls he purchases is 0. Budget (Dollars) 40.00 40.00 40.00 Salad Pizza (Bowls) (Slices) 0 5 0 Use the black line (plus symbols) to plot the line illustrating the combinations of salad and pizza that Carlos can purchase with a…Q3. Create your own question according to the information below. Using the budget constraint, Px*X+ Py*Y 1, assume that income is 100 TL. There is a pivoting to outwards which takes us from budget constraint I, to budget constraint l,. a) Choose Y1, Y, and X, by yourself. According to these numbers, what will Px and Py be? Y = 10 Y2 = X, = 20 10 Then, for , what is Px = Py = Then, for , what is Px = 5 Py = 2.5 b) Choose a combination of (X.Y) on I, by yourself. Assume that X and Y are substitute products. According to this, choose your new position on 1,, i.e., new combination of (X.Y) on I,. Explain why. combination of (X,Y) on I; : new combination of (X.Y) on I,: Explanation: c) Use your combination of (X.Y) on in (b). Assume that X and Y are complementary products. According to this, choose your new position on , i.e. new combination of (X.Y) on I. Explain why. combination of (X,Y) on I new combination of (XY) on I,