Microeconomics Problems
this is a econ question, and for 2 and 3. if u need anything just let me know.
I need this question answer by step by step, I need all step for these 2 questions
2) Suppose utility is given by the Cobb-Douglas utility function U = X 2 Y 2.
A) Find 3 points on each of the U — 2 and U = 4 indifference curves and sketch them.
B) Briefly discuss if these indifference curves satisfy the 4 properties of indifference curves discussed in lecture.
C) For this utility function the marginal utility of good X is: MUX = |X“2 y 2 and the marginal utility of good Y is: MUy = ^X*Y~2. Find the marginal rate of substitution (MRS).
D) What is the MRS at the 3 points you found on the U = 4 indifference curve? How many units of good Y will this consumer give up for an additional unit of good X at each of these 3 points?
3) Given the Cobb-Douglas utility function U = X*Yi and income (I) is $100 answer the following questions.
A) Find the utility maximizing consumption bundle if the price of good X (Px) is $1 and the price of good Y (Py) is $1.
B) Find the utility maximizing consumption bundle if the price of good X (Px) is $4 and the price of good Y (Py) is $1.
C) What proportion of the consumers budget was spent of each of the goods in parts A) and B) ? *
D) Sketch a graph showing your answers for parts A) and B).
Microeconomics
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Course
Institution
Date
Question 2
U=X1/2 Y1/2
A) U=2
XY1441160.25
U=4
XY11644161
B) Briefly discuss if these indifference curves satisfy the 4 properties of indifference curves disused in lecture
Higher indifference curves are preferred to lower ones.
The curves satisfy this property. A higher indifference curve reflects higher level of satisfaction than lower indifference curve since people prefer to consume more goods.
Indifference curves slope downward to the right
The curves satisfy this property. If there is a basket of goods (x1, y1) and the consumer prefers different combinations of the goods, which satisfy his needs, th...
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