Calculate moes utility-maximizing purchases of x and y

Reference no: EM13245959

Moe's income is $320 per week and he spends it on two goods, X and Y. Good X costs $8 and good Y costs $4 per unit. His utility function is U = 4.5XY.

(a)Calculate Moe's utility-maximizing purchases of X and Y.

(b) Calculate Moe's constrained utility-maximum if his income decreases by $2.00?

(c) If the price of Y doubles, with no change in the price of X, by how much would his income have to increase to enable him to maintain his initial level of utility (as in part (a) above)?

(d) Using your answers from parts (a) and (c), calculate Moe's arc income elasticity of demand for good X.

Reference no: EM13245959

Questions Cloud

What is marginal utility of money equal at lower income : An individual lives in a world where there are only two goods, X and Y. His utility function per period is given by: U = 25x - 0.5x^2 + 50y - y^2 The price of x is $4 and the price of y is $8.What is his marginal utility of money equal to at this l..

Find the npv and pi of a project that costs : Find the NPV and PI of a project that costs $1,500 and returns $800 in year 1 and $850 in year 2. Assume the project's cost of capital is 8 percent.

Calculate the total energy stored in the capacitors : Two capacitors, of 3.2 and 4.8?F capacitance, are connected in parallel across a 300 V potential difference. Calculate the total energy stored in the capacitors

The madison location is the central headquarters for badger : The Madison location is the central headquarters for Badger Widgets. They have a full IT staff along with an established network infrastructure that includes Windows Server 2008 servers

Calculate moes utility-maximizing purchases of x and y : Moe's income is $320 per week and he spends it on two goods, X and Y. Good X costs $8 and good Y costs $4 per unit. His utility function is U = 4.5XY. (a)Calculate Moe's utility-maximizing purchases of X and Y.

What is the wind velocity : A light plane is headed due south with a speed of 190km/h relative to still air. After 1.00 hour, the pilot notices that they have covered only 137km, What is the wind velocity (magnitude)

Explain the continuity correction factor : Explain the Continuity Correction Factor and provide a good example and estimate the population proportion

Solve for and interpret the lagrangian multiplier : The staff budget for the Wellness Center for the coming semester is $1,200.00. Each member of the medical staff costs $60 and each member of the counseling staff costs $30. (a) Determine the optimal combination of medical and counseling staff for t..

Find the magnitude of the terminal velocity : You are told that the linear "drag coefficient" due to air resistance for a particular object is 0.32 N · s/m, Find the magnitude of the terminal velocity of this object when dropped from rest

User Account

All Pages