Suppose there are 100 units of good x and 50 units of good y in an...
Suppose there are 100 units of good x and 50 units of good y in an exchange economy with 2 people.
Suppose consumer 1 has a utility function u1(x1,y1)=x1y1 and consumer 2 has a utility function of u2(x2,y2)=(x2y2)^(1/2)
a. What is the MRS of person 1 at 25 units of good x and 12.5 units of good y? Express the MRS as a numerical value (one decimal) in terms of units of good y that we can take away if we give the person one more unit of good x and leave the person as well off as before.
b.What is the MRS of person 2 at the consumption bundle where person 2 receives 75 units of good x and 37.5 units of good y? Please provide a numerical value with one decimal only.
Suppose person 1 owns all of good x and person 2 owns all of good y. The price of good x is $1 and the price of good y is $2.
c.Given the initial endowment of person 1 and the current prices, how many units of good x does person 1 demand? Just put down the numerical value.
d.What is the optimal amount of good y for person 1 at the current prices and initial endowment? Just put down the numerical value.
e.What is the optimal amount of good x for person 2 at the current prices and initial endowment? Put down the numerical value.
f.What is the optimal amount of good y for person 2 at current prices and the initial endowment? Just put down the numerical value.
Homework Answers
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Suppose there are 100 units of good x and 50 units of good y in
an...
Suppose there are two consumers, A and B, and two goods, X and Y. Consumer A...
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Suppose there are two consumers, A and B, and two goods, X, and Y. Consumer A's...
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I know that the answer is shown so please show the work
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Suppose that Jim uses his budget to purchase 100 units of Good X and 100 units of Good Y. When the price of Good X rises, he purchases 55 units of Good X and 95 units of Good Y. An economist calculates his compensated budget and finds that in that scenario, Jim would buy 60 units of Good X and 105 units of Good Y Calculate the substitution effect Remember to include a negative sign (-) if the effect reduces...
I know that the answer is shown so please show the work
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