Thomas has utility function U(x, y) = x^1/2y^1/2 and faces prices px = 1 and py = 1 and has income I 10. Suppose the price of x increases to px = 4. How much does his income need to increase for him to be just as well off as before the price increase?

Recent research confirms that the demand for cigarettes is not only inelastic, but it also indicates that smokers with incomes in the lower half of all incomes respond to a given price increase by reducing their purchases by amounts that are more than four times as large as the purchase reductions made by smokers in the upper half of all incomes. How can the income and substitution effects of a price change help explain this finding?

What is the concept of diminishing marginal utility of consumers? How consumer use Marginal Rate of Substitution to reach consumer equilibrium level where MRTS = Px/Py?

Answer the table below showing the marginal utility schedules for product X and product Y for a hypothetical consumer. The price of product X is $4 and the price of product Y is $2. The income of the consumer is $30. Product X Product Y Quantity MUx 1 Quantity MUY 24 32 1 28 20 3 24 16 4 20 4 12 16 8 Refer to the above table. If the consumer buys both product X and product Y, how much will the consumer buy of each to maximize utility? units. X: units; Y: Blank # 1 Blank # 2 83%