ECON 2350 Lecture Notes - Lecture 7: Engel Curve, Utility, Budget Constraint

161 views2 pages

sapphiremoose467

30 Nov 2017

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

True/false: max gross has the utility function u(x, y) max x, y . If the price of x is the same as the price of y, max will buy equal amounts of x and y. Multiple choice: ollie has a utility function u(x, y) (x 2)(y 3). The price of x is and the price of y is . When he maximizes his utility subject to his budget constraint, he consumes positive amounts of both goods. Ans: george has which he decides to spend on x and y. Commodity x costs per unit and commodity y costs per unit. Ans: elmer"s utility function is u(x, y) min x, y2 . If preferences are quasilinear, then for very high incomes the income offer curve is a straight line parallel to one of the axes. If preferences are homothetic, then the slope of the engel curve for any good will decrease as income increases.

Related Questions

Assume that an individual consumes two goods, X and Y. The total utility (assumed measurable) of each good is independent of the consumption rate of other goods.
The price of X and Y are respectively $40 and $60. Use the following table of total utilities to answer the following questions.

Good	Total utility X	Total utility Y
1	20	45
2	38	78
3	54	108
4	68	135
5	80	159
6	90	180

a. The marginal utility of the fourth unit of Y is__________.
b. The marginal utility of the fifth unit of X is___________.
c. The marginal utility per dollar spent on the third unit of X is__________.
d. The marginal utility per dollar spent on the second unit of Y is__________.
e. If the consumer has $420 to spend, ______ unit of X and _______units of Y maximize utility subject to the budget constraint. Explain.
f. If the consumer has $220 to spend, _______ units of X and_______ units of Y maximize utility subject to the budget constraint. Explain.
g. If the consumer wanted 4 units of X and 6 units of Y, what would have to be his/her budget constraint in order to maximize his/her utility? Explain.

sangrializard991

Assume that an individual consumes two goods, X and Y. The total utility of each good is independent of the rate of consumption of the other good. The price of X and Y are $40 and $60 respectively. Use the following table of total utilities to answer the following questions. Good 571Total Utility of X Total Utility of Y 1 20 45 2 38 78 3 54 108 4 68 135 5 80 159 6 90 180 a. The marginal utility of the fourth unit of Y is __________. b. The marginal utility of the fifth unit of X is ___________. c. The marginal utility per dollar spent on the third unit of X is __________. d. The marginal utility per dollar spent on the second unit of Y is __________. e. If the consumer has $420 to spend, ______ unit of X and _______ units of Y maximize utility subject to the budget constraint. Explain. f. If the consumer has $220 to spend, _______ units of X and _______ units of Y maximize utility subject to the budget constraint. Explain.

indigomouse210

Assume that an individual consumes two goods, X and Y. The totalutility (assumed measurable) of each good is independent of therate of consumption of other good.
The price of X and Y are respectively $40 and $60. Use thefollowing table of total utilities to answer the followingquestions.

Good 1, 2 ,3 ,4, 5, 6
Total Utility of X 20, 38, 54, 68, 80, 90
Total Utility of Y 45, 78, 108, 135, 139, 180

a. The marginal utility of the fourth unit of Y is__________.
b. The marginal utility of the fifth unit of X is___________.
c. The marginal utility per dollar spent on the third unit of X is__________.
d. The marginal utility per dollar spent on the second unit of Y is__________.
e. If the consumer has $420 to spend, ______ unit of X and _______units of Y maximize utility subject to the budget constraint.Explain.
f. If the consumer has $220 to spend, _______ units of X and_______ units of Y maximize utility subject to the budgetconstraint. Explain.
g. If the consumer wanted 4 units of X and 6 units of Y what wouldhave to be his/her budget constraint in order to maximize his/herutility? Explain.

ambercricket754

ECON 2350 Lecture Notes - Lecture 7: Engel Curve, Utility, Budget Constraint

Document Summary

Get access

Related Documents

ECON 2350 Study Guide - Midterm Guide: Production Function, Marginal Product, Horse Length

ECON 2350 Study Guide - Midterm Guide: Marginal Product, Isoquant, Production Function

ECON 2350 Lecture Notes - Lecture 1: Marginal Product, Production Function

Related Questions