A Consumer Has U = X⁰

question 40

Short Answer

A consumer has U = X^0.5Y^0.5 for a utility function, with MU_x = 0.5 X^-0.5Y^0.5 and MU_y = 0.5 X^0.5Y^-0.5. If she has income of $100, the price of X is $5, and the price of Y is $10, this consumer will use _____units of X and _____units of Y in equilibrium.

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Definitions:

Income Tax Rate

The rate at which income is taxed for individuals or corporations.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in an equal yearly amount.

Renovation Cost

The total expenses incurred during the process of improving or updating a property.

Initial Investments

Capital outlay at the start of a project, including costs for acquiring assets, setup, and other expenses necessary for the beginning of operations.