Marta consumes only goods X and Y and faces the following utility function: U=7 X+4 Y....

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Question

Marta consumes only goods X and Y and faces the following utility function: U=7 X+4 Y....

Marta consumes only goods X and Y and faces the following utility function: U=7 X+4 Y. The marginal utility for X is MUX=7 and the marginal utility for Y is MUY=4 . The price of X is $10 and the price of Y is $50. Marta has an initial budget of $200.

How many of X and Y will Marta buy given her utility function, her budget, and the prices?

X=

Y=

Suppose that the government places a restriction on X so that Marta can only buy 10 X.

How much of Y must Marta buy in order to achieve the same level of utility prior to the restriction?

(Round to the nearest 2 decimals places, we will NOT give marks for answers with rounding errors.)

What is the corresponding compensating variation?

(Round to the nearest 2 decimals places, we will NOT give marks for answers with rounding

business economics

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Answer 1

Answer #1

My U=7x+4y Mux mut = 7 Muy = 40 nux > MUY onlyx & x-px - 20. Mark will consum urility = 7620)=140 Fox x=lonen Gb gaet put res

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Answer 2

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Marta consumes only goods X and Y and faces the following utility function: U=7 X+4 Y....

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Marta consumes only goods X and Y and faces the following utility function: U=7 X+4 Y....

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