Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Need help with budget constraints, optimal bundles in the below exps of microeconomics. already calculated 1st two but want to understand rest. The questionsv are

Need help with budget constraints, optimal bundles in the below exps of microeconomics. already calculated 1st two but want to understand rest. The questionsv are ordered a,b,c,d,e,f.Thnx

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed
Jamal has utility function UB (X 1, X2) = (X1 + 2) . (X2+3). He also has income m, and faces prices P1 and P2 for goods 1 and 2 respectively. What is Jamal's budget constraint? OPIXI + P2X2 = m O( PI + P2) (X1 + X2) = m OPI + P2 = m OPIXI+ P2X2+m =0What is Jamal's MRS of good 1 for good 2? (Hint: The inverse MRS and negative MRS are not listed as answers below.) OXIX2+3X1+2X2+6 O dX 2 dX ] O X2+3 X1+2 O X2 X1 Jamal's MRS cannot be calculated from the provided informationWhat is Jamal's optimal choice of goods 1 and 2 as functions of his income and prices? (Assume an interior solution.) OX* = m+2P1-3P2 2P1 X 2 m-2P1+3 P2 2P2 OX*= m-3 P1+2P2 3 P1 * = m+3 P1-2P2 3P2 OX*= m-3 P1+2P2 2P2 = m+3P1-2P2 2 2P1 OX* m+2P1-3P2 3P2 m-2P1 +3 P2 3P1Korra has utility function UA (X1, X2) = [(X1 + 2) . (X2 + 3) 1. She has the same income as Jamal, and faces the same prices. Find her optimal consumption bundle. (Assume an interior solution.) OX*= m+2P1-3P2 2P1 X* m-2P1 +3 P2 2P2 OX* = m-3 P1+2P2 3P1 X * m+3 P1-2P2 3P2 OX* m-3 P1+2P2 2P2 * = m+3 P1-2P2 2P1 OX*= m+2P1-3P2 3 P2 m-2P1 +3 P2 2 3 P1A third consumer, Larry has preferences UC (X1, X2) = (X1 + 2)2 . (X2 +3) and the same income as Jamal and Korra. Find his optimal consumption bundle. (Assume an interior solution.) OX*= 2m+6P2-2P1 3 P = m+2P1-6P2 3 P2 OX* = 2m+2P2-6P1 3 P = m+6P1-2P2 3 P2 OX*= 2m-6P2+2P1 3 P * = m-2P1+6P2 3P2 OX*= 2m-2P2+6P1 3P1 m-6P1 +2P2 2 3P2How does Larry's consumption differ from Korra's? (Assume interior solutions.) O Larry consumes more X1 and more X2 at the same prices. 0 Larry consumes less X1 and more X2 at the same prices. 0 Larry consumes less X1 and less X2 at the same prices. 0 Larry consumes more X1 and less X2 at the same prices. 0 It does not differ. Larry consumes the same amount of X1 and the same amount of X2 at the same prices. OThe answer cannot be determined from the provided information

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Economics Theory and Policy

Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz

9th Edition

978-0132146654, 0132146657, 9780273754091, 978-0273754206

More Books