2. A rational consumer spends all of her income on two goods: Apple and Banana. Suppose the last dollar spent on Apple increased her total utility from 60 utils to 68 utils and the last dollar spent on Banana increased her total utility from 25 utils to 29 utils. If the price of a unit of Apple is 2 Birr, what is the price of a unit of Banana at equilibrium?
3. Given utility function U= X0.5Y0.5 where PX = 12 Birr, Birr, PY = 4 Birr and the income of the consumer is, M= 240 Birr.
a. Find the utility maximizing combinations of X and Y.
b. Calculate marginal rate of substitution of X for Y (MRSX,Y) at equilibrium and interpret your result.
Answers
Answer:
rational consumer spends all of her income on two goods: Apple and Banana. Suppose the last dollar spent on Apple increased her total utility from 60 utils to 68 utils and the last dollar spent on Banana increased her total utility from 25 utils to 29 utils. If the price of a unit of Apple is 2 Birr, what is the price of a unit of Banana at equilibrium?
3. Given utility function U= X0.5Y0.5 where PX = 12 Birr, Birr, PY = 4 Birr and the income of the consumer is, M= 240 Birr.
a. Find the utility maximizing combinations of X and Y.
b. Calculate marginal rate of substitution of X for Y (MRSX,Y) at equilibrium and interpret your result.
What will be the effect of 10 percent rise in price of a good on its demand if price elasticity of demand (a)zero,(b)-1,(c)-2rational consumer spends all of her income on two goods: Apple and Banana. Suppose the last dollar spent on Apple increased her total utility from 60 utils to 68 utils and the last dollar spent on Banana increased her total utility from 25 utils to 29 utils. If the price of a unit of Apple is 2 Birr, what is the price of a unit of Banana at equilibrium?
3. Given utility function U= X0.5Y0.5 where PX = 12 Birr, Birr, PY = 4 Birr and the income of the consumer is, M= 240 Birr.
a. Find the utility maximizing combinations of X and Y.
b. Calculate marginal rate of substitution of X for Y (MRSX,Y) at equilibrium and interpret your result.
Answer:
1
Explanation:
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