Suppose That a Consumer Has Utility U(X,Y) = 2XY

question 7

Essay

Suppose that a consumer has utility U(X,Y) = 2XY + X and income of $499 to spend on goods X and Y.
a. The prices of X and Y are $1 and $2 per unit, respectively. Use a Lagrangian to solve for the optimal basket of goods.
b. Suppose that the price of X increases to $2 per unit. Use a Lagrangian to solve for the new optimal basket of goods. Find the total effect of the price change on the consumption of each good.
c. Use a Lagrangian to find the substitution effect of the increase in the price of good X on the consumption of each good. What income would the consumer need to attain the original level of utility if the price of X increased to $2 per unit?
d. Find the income effect of the increase in the price of good X on the consumption of each good. Are the goods normal or inferior? Explain.
e. Show that the total effect of the increase in the price of X is equal to the sum of the substitution effect and the income effect.

Understand the regulation and effects of various hormones on their target organs.

Identify the major endocrine glands in the human body and their locations.

Understand the function of different endocrine glands.

Describe the hormone secretion mechanism of the posterior pituitary gland.

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Definitions:

Purchaser's Inventory

Goods and materials that a business holds for the ultimate goal of resale.

LIFO Conformity Rule

A tax regulation requiring companies that use the Last In, First Out (LIFO) method for tax reporting to also use it for financial reporting.

Tax Reporting

The process of preparing and submitting tax documents to relevant tax authorities, detailing income, deductions, and other tax-related information.

Financial Reporting

Refers to the process of producing statements that disclose an organization's financial status to management, investors, and the government.