Question #102586
Given utility function U= X0.5Y0.5 where Px= 12 Birr, Bir, Py=4 Birr and the income of
the consumer is, M= 240 Birr.
A. Find the utility maximizing combinations of X and Y.
D. Calculate marginal rate of substitution of X for Y (MRSX.Y) at equilibrium and inierpiet
1
2020-02-10T08:53:47-0500

Solution:

A)

"MU_x=0.5 \\frac {y^{0.5}}{x^{0.5}}"

"MU_y=0.5 \\frac {x^{0.5}}{y^{0.5}}"

"{\\frac{MU_x}{p_x}}=\\frac {MU_y}{p_y}"

"x \\times p_x+ y \\times p_y=M"

"y=3x"

"12 \\times x+4 \\times y=240"

"x=10, y=30."

D)

"\\frac {\\partial U}{\\partial x \\partial y} =\\frac {0.25} {(xy)^{0.5}}"

"MRS x.y = \\frac {\\partial U} {\\partial x \\partial y} = \\frac {0.25}{(10 \\times 30)^{0.5}}=0.015"

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17.02.20, 15:50

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Jira Desta
15.02.20, 10:57

When price of tea in local café rises from Br. 10 to 15 per cup, demand for coffee rises from 3000 cups to 5000 cups a day despite no change in coffee prices. determine cross price elacticity and what kind of relation exists between the twoo goods?

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14.02.20, 16:54

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14.02.20, 12:03

thank you so much and God bless you more