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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.
The council decides to allow a boat to fish in the lake only if its owner buys a fishing licence. To maximize total profit (of citizens and council), how many groschens should the council charge for a licence?
From the e-Activity, determine the environmental variable most likely to affect the short-run production over the next 12 months. Determine what managers can do to prepare for the possible change in short-run production.
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A monopolist has two types of customers. There are 100 Type A, who will each pay up to $10 for a single unit of the good, and 50 of Type B, who will each pay up to $8. Neither is willing to purchase additional units at any price. If it must charge..
Now suppose the government decides to subsidize the production of sugar (regardless of who it is sold to). The government wants to achieve the same increase in domestic production as in part d). What should be the amount of such production subsidy..
Frederic Bastiat (1801 - 1850) was a French political economist famous for exploding popular economic misconceptions
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Estimate the number of cups served per week and determine outlet demand curve. What would be the effect of a $5000 increase in the competitors' advertisement expenditure and outlet demand curve
What are some of the ways these curves shift and what is the corresponding change to the point of equilibrium?
Define world allocative efficiency as it relates to regionalism and multilateralism. Discuss the static effects and dynamic effects of customs unions.
A monopolist has two types of customers. There are 100 of TYPE A, who will each pay up tp $10 for a single unit of the good, and 50 of TYPE B, who will each pay up to $8.00.
According to the agreement achieved by the Administration and the Congress, were there a breach of the debt ceiling (limit) because of the budget deficit, the defense budget would be automatically reduced by half.
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