Budget line and his highest attainable indifference curve

Assignment Help Business Economics

Reference no: EM131198512

Johannes has a utility function given by U=xy/(x+y) where x is the amount of product 1 consumed per period and y is the amount of product 2 consumed per period. Johannes’ monthly income is $200.

if the first 50 units of product 1 sell for $2 per unit but for x>50 the price of product 1 falls to $1 per unit. Assume Johannes can buy as much of product 2 as he likes at a constant price of $2 per unit.

Find Johannes’ utility maximizing consumption levels for products 1 and 2 . Illustrate your answer with a diagram showing Johannes’ budget line and his highest attainable indifference curve.

Reference no: EM131198512

Questions Cloud

What is the proability tha an individual owns neither stocks : A survey of 200 college graduates who have been working for at least 3 years found that 90 owned only mutual funds, 20 owned only stocks, and 70 owned both. What is the probability that an individual owns a stock? A mutual fund? What is the proabilit..

Estimate the cutting time and the mrr : .You have determined for this metal that the cutting speed should be 25 sfpm, the depth of cut needed here for roughing is 0.25 in., and the feed will be 0.1 in. per stroke. Determine the approximate crank rpm and then estimate the cutting time an..

What are some violence indicators an employee might display : What are some violence indicators an employee might display? What are some actions management can take to help prevent workplace violence? How can employees protect themselves against workplace violence?

Basis of the linear transformation : a) Enter a basis of the linear transformation's kernel, as a list of vectors, for example (1,2,3),(2,1,3). b) Enter a basis of the linear transformation's range.

Budget line and his highest attainable indifference curve : Johannes has a utility function given by U=xy/(x+y) where x is the amount of product 1 consumed per period and y is the amount of product 2 consumed per period. Johannes’ monthly income is $200. Find Johannes’ utility maximizing consumption levels fo..

Analyze incidence of sales tax for three different scenarios : Minnesota and Tennessee, among other states have recently began to tax the sale of health care providers such as hospitals and physicians. Analyze the incidence of this sales tax for three different scenarios. The demand for medical services is compl..

Estimate the cutting time for the cut : In cutting a 6-in.-long slot in a piece of AISI 1020 cold-rolled steel that is 1 in. thick, the material is fed to a band saw blade with teeth having a pitch of 1.27 mm (20 pitch) at the rate of 0.0001 in. per tooth. Estimate the cutting time for ..

Compute the probability that all of the balls : Compute the probability that all of the balls in the sample are the same color. (Round your answer to four decimal places.)

Increasing marginal costs of production : The discussion on price ceiling supposed that the medical industry faces increasing marginal costs of production. Suppose a for profit, monopolistic hospital is experiencing economies of scale (ie a downward sloping average and marinal cost curve) in..

User Account

All Pages