--%>
Assignment Help - homework help

Question on utility function

 Assume a consumer with the given utility function: U = 3y1y2 + 5.

  1. Suppose y2 = 1, derive the marginal utility schedule for y1. In what direction is it moving?
  2. Obtain indifference curves for U = 23 and for U = 59.
  3. Suppose money income = $18.00, p1 = $6.00, and p2 = $2.00, determine the consumer equilibrium position by using the above indifference curves.
  4. Suppose money income = $18.00, p1 = $2.00, and p2 = $2.00, determine the consumer equilibrium position by using the above indifference curves.
  5. Employing the results of (3) and (4):                                                                                                                                                             
    • How much was the rise in demand for good 1 caused by the substitution effect? How much was caused by the income effect?
    • Draw the consumer demand curve for good 1
    • Find out whether goods 1 and 2 are substitutes, complements, or independents.
    • Derive the price elasticity of demand and define whether it is elastic, inelastic, or unitary elastic.
    • Suppose that money income rise from $18.00 to $30.00 while prices remain constant at p1 = $6.00 and  p2 = $2.00. Determine the new consumer equilibrium position. By using the results just obtained, classify goods 1 and 2 according to whether they are superior, normal, or inferior goods.

   Related Questions in Microeconomics

  • Q : Increase profits of quantity selling by

    When a monopolist was selling a quantity which marginal revenue [MR] is greater than marginal costs [marginal costs [MC] in that case this could increase profits by: (w) raising price. (x) increasing output. (y) raisi

    		•
  • Q : Purely competitive industry in long run

    When a purely competitive industry is into long run equilibrium, in that case the total: (w) costs of all the firms’ combined outputs are minimized. (x) revenues of the industry are maximized. (y) welfare of society is at its mi

    		•
  • Q : Influences of Ceteris Paribus The Latin

    The Latin phrase applies to the idea which all other effects on some dependent variable are to be supposed constant if examining the effect of changing a single independent variable is as: (1) Fiat justitia, ruat coelum. (2) Platea unum. (3) Unum paribus. (4) Ceteris

    		•
  • Q : Determine the market price when demand

    When both demand and supply rise within the market for cell phones, we would suppose the market price to: (w) increase. (x) decrease. (y) increase, decrease, or stay similar, depending upon the relative magnitudes of the shifts. (z) s

    		•
  • Q : Total utility and marginal utility Can

    Can someone please help me in finding out the accurate answer from the following question. The paradox of the value (also termed as the diamond-water paradox) occurs from: (1) High transaction costs. (2) Low transaction costs. (3) Failures to differentiate among the m

    		•
  • Q : Definitions of Poverty The official

    The official United States “poverty line” is based upon the cost of securing the goods essential to maintain a standard of living: (w) at a middle class level of comfort. (x) one standard deviation below the national average. (y) that is m

    		•
  • Q : Concentration ratio Explain the concept

    Explain the concept of a concentration ratio.  Is the concentration ratio in a monopolistically competitive industry likely to be higher than for a perfectly competitive industry

    		•
  • Q : Featherbedding-Blacklisting-Yellow Dog

    Can someone please help me in finding out the accurate answer from the following question. Practices that were common in the labor markets however that are now illegal comprise: (i) Boycotting, scabbing and shirking. (ii) Sweetheart deals assembly line speedups and st

    		•
  • Q : Approximate unitary price elasticity of

    Nostalgia Corporation’s output of “Silver Screen Classic” DVDs consequent to the point where demand has unitary price elasticity is approximately: (1) 3 million copies. (2) 4 million copies. (3) 5 million copies. (4) 6.5 million copi

    		•
  • Q : Principal-Agent Problems Which of the

    Which of the following is not an illustration of the principal-agent problem? (1) The real estate agent vends your house for less than you settled to. (2) The salespeople of the luggage company book first class seats whenever traveling out of town and write off the ex

    		•