Jim's utility function is U(x, y) = xy. Jerry's utility function is U(x, y) = 1, 000xy + 2, 000. Tammy's utility function is U(x, y) = xy(1 - xy). Oral's utility function is U(x, y) = - 1/(10+ 2xy). Marjoe's utility function is U(x, y) = x(y + 1, 000). Pat's utility function is U(x, y) = 0.5xy - 10, 000. Billy's utility function is U(x, y) = x/y. Francis' utility function is U(x, y) = -xy.

(a) Who has the same preferences as Jim?

(b) Who has the same indifference curves as Jim?

(c) Explain why the answers to (a) and (b) differ.

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Insha FatimaLv10

28 Sep 2019

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Related questions

1. Suppose the price of x₁ is $20 and the price of x₂ is $4. If good x₁ is on the horizontal axis, what is the slope of the consumer's budget constraint?

a. -0.20

b. -0.25

c. -5.0

d. -0.2

e. -4.0

f. -20.0

2. Suppose the price of x1 is $5 and the price of x2 is $1 and Toni's income is $20. Suppose Toni gets a $5 gift card that can only be used for the purchase of x1 and there is no resale value of the gift card. With the gift card, the commodity bundle (1,20) is on Toni's budget constraint.

True

False

3. Tiffany's utility function is given by the formula U(x1, x2) = min{20x1, 10x2}. If x1 = x2, which commodity will have a greater marginal utility?

A. Both x1 and x2 have the same marginal utility

B. It is not possible to determine which commodity has higher marginal utility

C. x2

D. x1

4. For U(x₁,x₂) = 6x₁^1/3 + x₂, preferences are

a. consistent with diminishing marginal rate of substitution.

b. consistent with constant marginal rate of substitution.

c. consistent with increasing marginal rate of substitution.

d. not consistent with a utility function.

5. For a utility function of the form U(x₁,x₂)=min{5x₁,10x_2}, the individual will have excess x₂ for commodity bundles where

a. x2>2x1 b. x2>5x₁

c. x₂>0.5x₁ d. x2>10x₁

6. Matt enjoys Fuji and Gala apples and finds 1 Fuji apple to be just as good as 4 Gala apples.

a. Matt's preferences over Fuji (F) and Gala (G) apples can be represented by the utility function U(F,G)=0.25F+G

b. Matt's preferences over Fuji (F) and Gala (G) apples can be represented by the utility function U(F,G)=F+4G

c. Matt's preferences over Fuji (F) and Gala (G) apples can be represented by the utility function U(F,G)=4F+.25G

d. Matt's preferences over Fuji (F) and Gala (G) apples can be represented by the utility function U(F,G)=4F+G

e. Both A and B

f. Both C and D

amaranthelk637

Given prices for two goods PX = 2 and PY = 3 and a budget of $120 a consumer is trying to maximize the utility function U(X, Y ) = 2X0.3Y 0.7 . Use the Lagrange method to solve this problem, but donât worry about the second order conditions (if you wish, you can actually check that the MRS is decreasing and this utility function is well behaved). a) Write and solve the utility maximization problem subject to the budget constraint. What is the resulting value of the utility function? (U=49.0481) b) Write and solve the dual problem. Do you get the same optimal solution (the same optimal combination of X and Y)? What is the resulting expenditure? Does that match the budget of your original (primal) problem? (X=18, Y=28 should be the same as for a or very close due to rounding) c) Assume now general values for prices and income. Solve for the optimal amounts of X and Y as functions of PX, PY , and I. What conclusion can you draw regarding how you spend your budget when dealing with Cobb Douglas functions with exponents that add up to 1. You can actually try to solve the general case where we replace the exponents 0.3 and 0.7 with some Î± and Î², where Î± + Î² = 1. (Hint: you should find that you spend percent of your income on X and Î² percent of your income on Y. See if you can get there by solving!)