A Consumer's Utility Function Is Given By

question 58

Essay

A consumer's utility function is given by:
U(x,y)= 10xy
Currently,the prices of goods x and y are $3 and $5,respectively,and the consumer's income is $150.
a.Find the MRS for this consumer for any given bundle (x,y).
b.Find the optimal consumption bundle for this consumer.
c.Suppose the price of good x doubles.How much income is required so that the consumer is able to purchase the original consumption bundle (if you were unable to solve d. ,then take a guess at what the optimal bundle is before solving this)
d.Now that the price of good x has doubled,how much income is needed for the consumer to reach the original level of utility? Is this more or less that what you found in e.?

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Definitions:

Kinesthetic Sense

The sense that detects bodily position, weight, or movement of the muscles, tendons, and joints.

Coordination

The organization of different elements or parts so as to enable them to work together efficiently, often seen in physical movements and organizational tasks.

Sensory Accommodation

The process by which sensory systems adapt or adjust their sensitivity to different levels of stimulation.

Vestibular Sense

The sensory system located in the inner ear that regulates balance and spatial orientation.