Consumer purchase in order to maximize her utility

Assignment Help Business Economics

Reference no: EM131003640

Suppose a consumer's utility function is given by U(X,Y) = X*Y. Also, the consumer has $288 to spend, and the price of X, PX=16, and the price of Y, PY = 1.

A) How much X and Y should the consumer purchase in order to maximize her utility?

B) How much total utility does the consumer receive?

C) Now suppose PX decreases to 9. What is the new bundle of X and Y that the consumer will demand?

D) How much money would the consumer need in order to have the same utility level after the price change as before the price change?

E) Of the total change in the quantity demanded of X, how much is due to the substitution effect and how much is due to the income effect?

Reference no: EM131003640

Questions Cloud

Wynn sheet metal reported an operating loss : Prepare the journal entry to recognize the income tax benefit of the operating loss. Wynn elects the carry back option.

Find the current bid-ask spread : Look up Humana Energy (HUM) and find the current bid-ask spread as well as the order size for the bid and ask, during the trading day (Yahoo Finance). Discuss the consequence of these numbers for the risk of the firm.

What happens to equilibrium price and equilibrium quantity : What happens to equilibrium price and the equilibrium quantity of each good described in the situations described below? Illustrate your answers. Sunnyvale is named the most liveable city in the United States. At the same time, the wage rates of home..

Explain the relationship between regimes and your variables : Discuss the ways that citizens in democratic political regimes may or may not be healthier than their counterparts in authoritarian regimes at the same level of economic development. Explain the relationship between regimes and your variables

Consumer purchase in order to maximize her utility : Suppose a consumer's utility function is given by U(X,Y) = X*Y. Also, the consumer has $288 to spend, and the price of X, PX=16, and the price of Y, PY = 1. How much X and Y should the consumer purchase in order to maximize her utility? How much tota..

Consider the principles of ethics : For each case, also ask one legal and one ethical question that might present. Consider the principles of ethics from last weeks assignment and the laws addressed this week. You should also use outside references to dig deeper into each case for y..

Find the tangent plane at given point : Given f(x, y) = √((x2/4) + 9y2 - 1). Find the tangent plane at (2, 1, 3). Calculate the differential for dx = dy = 0.1 and 1.

Wynn elects the carry back option : Prepare the journal entry to recognize the income tax benefit of the operating loss. Wynn elects the carry back option.

What is average variable cost : Suppose your business is currently employing 750 workers, the only variable input, at a wage rate of $48. The average product of labor is 96, the last worker added 6 units to total output, and total fixed cost is $12,000. What is Average Variable Cos..

User Account

All Pages