HomeworkLib
Question

Mort’s utility function is U(x1,x2) = x1x2. His income is $200. The price of good 2...

Mort’s utility function is U(x1,x2) = x1x2.

His income is $200.

The price of good 2 is $10.

Good 1 is priced as follows: The first 12 units cost $10 per unit and any additional units cost $5 per unit.

What consumption bundle does Mort choose?

1)

x1 =18, x2 = 6

2)

x1 =10, x2 = 10

3)

x1 =14, x2 = 7

4)

x1 =12, x2 = 8
business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

0 0
Add a comment
Know the answer?
Add Answer to:
Mort’s utility function is U(x1,x2) = x1x2. His income is $200. The price of good 2...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Nathan’s utility function is U(x1, x2) = lnx1 + x2. If the price of good 1...

    Nathan’s utility function is U(x1, x2) = lnx1 + x2. If the price of good 1 is $1, the price of good 2 is $5, and his income is $100, how many units of good 1 (x1) and good 2 (x2) will Nathan consume?

  • Find the optimal bundle for the following utility functions and for budget line (P1X1+P2X2=m) a) U(X1,X2)=X1X2...

    Find the optimal bundle for the following utility functions and for budget line (P1X1+P2X2=m) a) U(X1,X2)=X1X2 b) U(X1,X2)=X1^2X2^3 c) U(X1,X2)=X1^2+2X2 d)U(X1,X2)= ln (x1^3X2^4) e) U(X1,X2)= 2X1+X2 f) U(X1,X2)= min (2X1,X2)

  • Anna spends all her income on wine (good 1) and cheese (good 2). Her utility function...

    Anna spends all her income on wine (good 1) and cheese (good 2). Her utility function is u(x1; x2) = x1x2. Her income is m = $200. The prices for the two goods are p1 = $20 and p2 = $10 respectively. Find Annaís optimal consumption bundle. Show the complete calculations, and illustrate your answer graphically (draw the indi§erence curve and the budget constraint). How would your answer change to part (a) if Annaís utility function were given by v(x1;...

  • An individual has a utility function given by U = x1x2 Marginal Rate of Substitution is...

    An individual has a utility function given by U = x1x2 Marginal Rate of Substitution is –x2/(x1) and therefore the Demand function for good 1 is x1= m/(2P1) Assume m=$42, P1=$1, P2=$1 (m=income, P1 is the price of good 1 , P2 is the price of good 2) Calculate the quantity of good one in the optimal choice bundle (x1A)

  • My utility is given by u(x1, x2) = 2x194x2-2 + In(x1) + [min{x1, x2)] + 2x2...

    My utility is given by u(x1, x2) = 2x194x2-2 + In(x1) + [min{x1, x2)] + 2x2 + x1!! True, False, or Cannot Be Determined: When P1 = $2,P2 = $4, and I = $100, my optimal consumption bundle is (x1,x2) = (25,15).

  • Consider the utility function: u(x1,x2) = x1 +x2.

    1. Consider the utility function: u(x1,x2) = x1 +x2. Find the corresponding Hicksian demand function 2. For each of the three utility functions below, find the substitution effect, the income effect, and the total effect that result when prices change from p = (2,1) to p' = (2,4). Assume the consumer has income I = 20. (a) Before doing any calculation, make an educated guess about the relative magnitude of the three substitution effects and the three income effects to be found below. (b)...

  • Donald consumes goods x1 and x2. His utility function is U(x1, x2) = x1(x2)3. He is...

    Donald consumes goods x1 and x2. His utility function is U(x1, x2) = x1(x2)3. He is endowed with 43 units of x1 and 7 units of x2. The price of x1 is $1 and the price of x2 is $3. Find his net demand for x1. a) b) c) d) e)

  • Gloria likes watching movies (x1) and listen to her favorite songs(x2). Her utility function is given...

    Gloria likes watching movies (x1) and listen to her favorite songs(x2). Her utility function is given by 1 U (x1, x2) = 2x1x2 1. Find Gloria’s MRS, for an arbitrary bundle (x1, x2) . 2. Plot Gloria’s indifference curve that passes through the bundle (1, 1). Find the MRS for this bundle, and depict it on the graph. Which good is "locally more valued" at (1, 1) movies or songs? (Hint: good x is locally more valued than good y...

  • 1. (20 points) Mac has utility over x; and x2 given by u(x1, x2) = min...

    1. (20 points) Mac has utility over x; and x2 given by u(x1, x2) = min . If P. = $1. P. = $1. and I = $100. find the value of xı* (Hint: This is Leontief utility, the kind with right-angled indifference curves) 2. (10 points) If P, = $4, P2 = $2, and I = $20, and my utility is given by u(x1, x2) = 4x1 + 3x2, find x* (Note: I'm asking for optimal consumption of Good...

  • how did they get MRS= -x2/x1? Consider the utility function u ( 2 2) = Inc. +Inc. Suppose that the initial situation...

    how did they get MRS= -x2/x1? Consider the utility function u ( 2 2) = Inc. +Inc. Suppose that the initial situation s given by Pi = 1, P2 = 2 and m = 100. Note that MU = 1 and MU2 = a) Find the consumer's optimal consumption bundle (0,2) and his utility at this consumption bundle. Solution: The budget line is 2.02 = 100 - 21 (1) Since the optimal bundle is an interior point, the tangency condition...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT