Discuss how much total utility does the consumer receive, Macroeconomics

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Discuss how much total utility does the consumer receive

Assume a consumer's utility function is given by U(X,Y) = X*Y. Also, the consumer has $576 to spend, and the price of X, P_X = 16, and the price of Y, P_Y = 4.

1. Discuss how much X and Y should the consumer purchase in order to maximize her utility?

2. Discuss how much total utility does the consumer receive?

3. Now suppose P_X decreases to 9. Determine the new bundle of X and Y that the consumer will demand?

4. Discuss how much money would the consumer need in order to have the same utility level after the price change as before the price change?

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

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Macroeconomics: Discuss how much total utility does the consumer receive

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Macroeconomics: Discuss how much total utility does the consumer receive

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Macroeconomics: Discuss how much total utility does the consumer receive

Reference No:- TGS0873017

Recent Questions Asked Macroeconomics

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