Natasha consumes two goods, X and Y. Her utility function is given as: U = X 0.9 y 0.1 The current market price for X is

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Natasha Consumes Two Goods X And Y Her Utility Function Is Given As U X 0 9 Y 0 1 The Current Market Price For X Is 1 (124.42 KiB) Viewed 16 times

Natasha consumes two goods, X and Y. Her utility function is given as: U = X 0.9 y 0.1 The current market price for X is $1 and the market price for Y is $30. Natasha's current income is $300. Determine the X, Y combination that maximizes Natasha's utility. b. Now suppose the price of X increases to $3 while price of Y and income remains at $30 and $300. Determine the X, Y combination that maximizes Natasha's utility with the price increase. c. Calculate the price elasticity of demand for good X when the price increases from $1 to $3. d. Using the price - quantity combinations for good X in parts (a) and (b), write out the linear demand function for Natasha. e. Write out her marginal revenue function. f. Draw Natasha's demand and marginal revenue curves. Label curves appropriately. g. Given the demand curve in part (c), how much of good X will Natasha buy if the price of X is $2.