(Solution) 13 Q3. Draw A Budget Constraint That Is Consistent With The Following Prices And Income. Given, Income = 400, PY = 100, PX = 50 . X Is T-shirt And Y... | Snapessays.com


(Solution) 13 Q3. Draw a budget constraint that is consistent with the following prices and income. Given, income = 400, PY = 100, PX = 50 . X is T-shirt and Y...


Question is in the document below. Please give me full and correct answer, thank you very much!13

 

Q3. Draw a budget constraint that is consistent with the following prices and income.

 

Given, income = 400, P

 

Y

 

= 100, P

 

X

 

= 50 . X is T-shirt and Y is blue jean.

 

a.

 

Demonstrate your original budget constraint (Base case)

 

b.

 

Demonstrate how your original budget constraint would change if income

 

increases to 500. (Compared to an original case)

 

c.

 

Demonstrate how your original budget constraint would change if P

 

Y

 

decreases to

 

10. (Compared to an original case)

 

Q4. Assume a consumer with the Cobb-Douglas utility function:

 

U (X, Y) = X

 

0.5

 

Y

 

0.5

 

where MRS= (MU

 

x

 

/MU

 

y

 

)=Y/X

 

The prices are P

 

X

 

= P

 

Y

 

= $1 and the income is $100.

 

a. Find the optimal levels of demand for X* and Y*.

 

b. What is his utility?

 


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This question was answered on: May 23, 2022

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