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U = U(X, Y) = (X + 2)(Y + 1)
M = 95, Px= 10, and Py= 5
A Set up the consumers’ budget constraint
a. Set up the constrained maximization problem, and derive the first-order conditions.
b. Find the amounts of goods X and Y the consumer will purchase in equilibrium
Qs = -17.5 + 10P
a) At the equilibrium price calculate the consumer’ and producers’ surplus.
b) If a price floor of shs 5 is imposed on good X in this market
i) what is the new consumers’ surplus and by how much has it changed?
ii) what is the new producers’ surplus and by how much has it changed?
c) Calculate the transferred surplus. And state from who to whom is it.
d) Calculate the deadweight loss of the price floor
U = U(X, Y) = (X + 2)(Y + 1) M = 95, Px= 10, and Py= 5
Set up the consumers’ budget constraint
Y = C+I+G+X-M
Find the equilibrium values of Y, C and M
( WITH REFERENCES)
The marginal utilities are:
MUx=16x^-.5 MUy= 1 How do I derive the demand functions for x and y?