### Assume that there are two goods in the economy

Assignment Help Microeconomics
##### Reference no: EM13303698

Assume that there are two goods in the economy, Xand Y. Preferences of consumerAare

represented by the utility function: Ua=5Q ax (Qay), associated to a marginal rate of substitution

(MRS) equal to Qay/Qax. . Preferences of consumerBare represented by the utility function: Ub=Qbx(Qby-100)associated to a marginal rate of substitution (MRS) equal to (Qby-100)/Qbx. Both consumers have an income of \$300, and the prices of X and Y are \$60 and \$2 respectively.

a) Find (algebraically) consumer’sAutility maximizing (optimal) combination of Qax and Qay. At this point compute the level of utility enjoyed by consumer A.

b) Find (algebraically) consumer's B utility maximizing (optimal) combination of Qbx and Qby. At this point, compute the level of utility enjoyed by consumer B.

c)The price of X is reduced from \$60 to \$40. Find (algebraically) the newconsumer's A utility maximizing (optimal) combination of Qax and Qay.

d)The price of X is reduced from \$60 to \$40. Find(algebraically) the new consumer's B utility maximizing (optimal) combination of Qbx and Qby.

### Previous Q& A

#### How large of a rebate should the company offer to a buyer

A manufacture has been selling 1700 television sets a week at 420dollars each. A market survey indicates that for each 21 -dollarrebate offered to a buyer, the number of sets sold will increase by210 per week.

#### What would be your dollar amount profit

The bid rate of the New Zealand dollar is \$.323 while the ask rate is \$.325 at Bank Y. What would be your dollar amount profit if you use \$2,000,000 to execute locational arbitrage?

#### How much must the grandfather put into ed trust today

how much must the grandfather put into Ed's trust today and each subsequent year to enable him to have the same retirement nest egg as Steve after the last payment is made on their 65th birthday?

#### Develop a department budget

Develop a department budget. The accounting department has supplied you with the following projected information about how this year, 20XX, will end up for your department's spending.

#### What is the npv if nyw refunds its bonds today

NYW's marginal tax rate is 40 percent. The new bonds would be issued when the old bonds are called.

#### Determine how far the bottom of the ship is below sea level

A supertanker filled with oil has a total mass of 11.7·108 kg. If the dimensions of the ship are those of a rectangular box 209 m long, 81.7 m wide

#### Find the gauge pressure at the bottom of the cone

An ice cream cone is filled with melted vanilla ice cream of density 1.21g/cm3 The cone is 10.1cm long and has a diameter of 6.1 cm at the larger top end. Find the gauge pressure at the bottom of the cone

#### Explain how signal and signal management calls

Describe how signal and signal management calls are used in creating a process and terminating it after certain interval. Give a simple example to illustrate this routine.

#### How profitability of company can be made to look better

Explain how the profitability of the company can be made to look better if they were to produce more products, even if they are not all sold right away.

#### By what factor is a blood vessel decreased in radius

Assuming a constant pressure gradient, if blood flow is reduced by 52%, by what factor is a blood vessel decreased in radius

### Similar Q& A

#### Why was microsoft investigated for antitrust behavior

Microsoft Monopoly--Why was Microsoft investigated for antitrust behavior Do you agree or disagree that Microsoft was trying to gain monopoly power in the computer software industry Are monopolies always bad

#### What will be the net or total effect of the decline

Suppose that there is a decline in the cost of a unit of capital. In the long run a.) What will be the substitution effect of this change on use of capital and labor, and why How would this be shown on an isoquant diagram (a diagram isnt needed, j..

#### Describe two different roles that interest rates play

Identify & describe two different roles that interest rates play in the economy. Does a change in an interest rate indicate that a change in some part of the economy is occurring Explain.

#### Explain what is meant by diminishing returns

Explain what is meant by diminishing returns. From these costs curves explain when diminishing return sets in? Why and explain the relationship between ATC, AVC and AFC.

#### Explain fluctuations in the level of economic activity

Economic fluctuations (or business cycles) are fluctuations in the level of economic activity, relative to a long-term growth trend. Comparing and contrasting the economic fluctuation the United States has experiences from 1990 to current date.

#### Evaluate how well can the design the first ib web site

Evaluate how well the design of the First IB web site meets the needs of a potential small business customer. Discuss the elements of the site that work particularly well in meeting the needs of this type of site visitor.

#### Why dont firms continue to get infinitely larger

Externalities are third party consequence of some other action. They can be positive or negative externalities and they impose a benefit or cost to a third party.

#### Find the quantity of toothpaste

Find the quantity of toothpaste that maximizes economic surplus. What is the relationship between this quantity and the market equilibrium quantity?

#### Why does the fed like to fight inflation in the economy

Why do you think the FED evaluates the money multiplier when making decisions with regard to the money supply What function does the money supply serve in our economy to influence certain economic variables

#### Firms produce in the short run

What level of output will these firms produce in the short run and are these firms operating under perfect or imperfect competition?

#### Determine demand and revenue equation

Results for Linear Demand Curve Estimation. Kenny Mcormick manages a 100-unit apartment building and knows from experience that all units willbe occupied if rent is \$900 per month.

#### What are the variables consumption shedule

What are the variables (the items measured on the axes) in a graph of the a) consumption shedule and b) the saving schedule Are the variables inversely (negatively) related or are they directly (positively) related