Consider two goods x and y- Suppose the utility function is u(x-y) - x.docx
Consider two goods x and y. Suppose the utility function is u(x,y) = x^0.75 y^0.25 which gives you the marginal rate of substitution MRS = -3y/x. Suppose the price of both goods are Px = $3 and Py = $5 per unit. The budget is I = $60. Solve the consumer choice problem by setting up two equations. A. How many units of x and y will the consumer buy? B. How much will the consumer spend on good x and good y? C. Derive MRS = -3y/x from the utility function. D. Re-do part A if the budget is I = $120. Based on your answer, are goods x and y normal goods or inferior goods, and why? A. How many units of x and y will the consumer buy? B. How much will the consumer spend on good x and good y? C. Derive MRS = -3y/x from the utility function. D. Re-do part A if the budget is I = $120. Based on your answer, are goods x and y normal goods or inferior goods, and why? .
Consider two goods x and y- Suppose the utility function is u(x-y) - x.docx
Consider two goods x and y. Suppose the utility function is u(x,y) = x^0.75 y^0.25 which gives you the marginal rate of substitution MRS = -3y/x. Suppose the price of both goods are Px = $3 and Py = $5 per unit. The budget is I = $60. Solve the consumer choice problem by setting up two equations. A. How many units of x and y will the consumer buy? B. How much will the consumer spend on good x and good y? C. Derive MRS = -3y/x from the utility function. D. Re-do part A if the budget is I = $120. Based on your answer, are goods x and y normal goods or inferior goods, and why? A. How many units of x and y will the consumer buy? B. How much will the consumer spend on good x and good y? C. Derive MRS = -3y/x from the utility function. D. Re-do part A if the budget is I = $120. Based on your answer, are goods x and y normal goods or inferior goods, and why? .
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Consider two goods x and y- Suppose the utility function is u(x-y) - x.docx
- 1. Consider two goods x and y. Suppose the utility function is u(x,y) = x^0.75 y^0.25 which gives you the marginal rate of substitution MRS = -3y/x. Suppose the price of both goods are Px = $3 and Py = $5 per unit. The budget is I = $60. Solve the consumer choice problem by setting up two equations. A. How many units of x and y will the consumer buy? B. How much will the consumer spend on good x and good y? C. Derive MRS = -3y/x from the utility function. D. Re-do part A if the budget is I = $120. Based on your answer, are goods x and y normal goods or inferior goods, and why? A. How many units of x and y will the consumer buy? B. How much will the consumer spend on good x and good y? C. Derive MRS = -3y/x from the utility function. D. Re-do part A if the budget is I = $120. Based on your answer, are goods x and y normal goods or inferior goods, and why?