Consider two consumers, A and B, who consume two goods, x and y. Assume that the utility function for A is and the utility function for B is . Consumer A is endowed with 10 units of x an 10 units of y. Consumer B is endowed with 10 units of x and 40 units of y.

Assume the price of y is set to $1. What is the expression for Consumer A's demand for x?

Question

Consider two consumers, A and B, who consume two goods, x and y. Assume that the utility function for A is  and the utility function for B is . Consumer A is endowed with 10 units of x an 10 units of y. Consumer B is endowed with 10 units of x and 40 units of y.

Assume the price of y is set to $1. What is the expression for Consumer A's demand for x?

BlackTom AI · Accepted Answer

This question is missing critical information required to derive Consumer A's demand for x.

What I need to proceed:
- The explicit utility function for Consumer A (U_A(x, y)). Without it, I cannot determine how A substitutes between x and y as prices change.
- The explicit utility function for Consumer B (U_B(x, y)) is also provided in the prompt, but since U_A is incomplete, the comparison or any joint reasoning cannot be completed.
- The exact formatting of the answer options. The provided answer option appears garbled (it shows symbols and partial expressions like 10 p_x + 10 4 p_x), making it unclear what the intended choice(s) are. Clear, well-formatted options are necessary to explain why each option is correct or incorrect.

What I can say in general, once the functions are known:
- With a two-good world (x and y) and given prices (p_x and p_y, with p_y = 1), Consumer A will choose x and y to maximize U_A(x, y) subject to the budget constraint p_x x + p_y y ≤ p_x x_A^0 + p_y y_A^0, where (x_A^0, y_A^0) is A’s endowment (here x_A^0 = 10, y_A^0 = 10).
- The budget is B_A = p_x * 10 + 1 * 10 = 10 p_x + 10.
- The solution for x_A^* will depend on the marginal rate of substitution (MRS) implied by U_A and the relative prices p_x and p_y. Depending on whether A’s utility is, for example, Cobb-Douglas, perfect substitutes, or perfect complements, the demand for x will take different forms (often involving p_x and a parameter from U_A).
- Once you provide U_A(x, y) explicitly and a clean list of answer choices for x_A^*, I can walk through the derivation step by step: set up the Lagrangian, derive FOC, solve for x in terms of p_x (and any parameters), and then evaluate whether each option matches the derived expression.

If you can supply:
- The exact U_A(x, y) expression
- The corrected, complete list of answer options
I will produce a detailed, option-by-option analysis explaining why each choice is correct or incorrect, with clear step-by-step reasoning and diverse phrasing.

ECON_104B_001_25S Lecture Quiz #1

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