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2. (25%) Consider a consumer with preferences represented by the utility function: u(x1, x2) = min...
A consumer has preferences represented by the utility function: u(21,12)=x2? Market prices are p1 = 2...
A consumer has preferences represented by the utility function: u(21,12)=x2? Market prices are p1 = 2 and P2 = 5. The consumer has an income m = 13. Find an expression for the consumer's demand for good 1,21 (P1). 39p1
1 pts Question 2 A consumer has preferences represented by the utility function: u(x1, x2)= x...
1 pts Question 2 A consumer has preferences represented by the utility function: u(x1, x2)= x x Market prices are pi = 3 and P2 = 4. The consumer has an income m 30. Find an expression for the consumer's Engel curve for good 1. x1(m). ооо D Question 3 1 pts
Consider the utility function u(x) = √x1 + √x2 ; and a standard budget constraint: p1x1+p2x2=I
1. (Consumer theory) Consider the utility function u(x) = √x1 + √x2 ; and a standard budget constraint: p1x1+p2x2=I. a. Are the preferences convex? (1 pt) b. Are the preferences represented by this function homothetic? (1 pt) c. Formally write the utility maximization problem, derive the first order conditions and find the Marshallian demand function. (2 pt) d. Verify that the demand function is homogeneous of degree 0 in prices and income. (1 pt) e. Find the indirect utility function. (1 pt) f. Find the expenditure function by...
The utility function is u = x1½ + x2, and the budget constraint is m =...
The utility function is u = x1½ + x2, and the budget constraint is m = p1x1 + p2x2. Derive the optimal demand curve for good 1, x1(p1, p2), and good 2, x2(m, p1, p2). Looking at the cross price effects (∂x1/∂p2 and ∂x2/∂p1) are goods x1 and x2 substitutes or complements? Looking at income effects (∂x1/∂m and ∂x2/∂m) are goods x1 and x2 inferior, normal or neither? Assume m=100, p1=0.5 and p2=1. Using the demand function you derived in...
1. Student A has preferences represented by U(x1,x2) = min{ax1,bx2}. Suppose good one has a special...
1. Student A has preferences represented by U(x1,x2) = min{ax1,bx2}. Suppose good one has a special tax. The government wants good one to be consumed as little as possible, so it imposes a tax on its price when more than x units are bought. Specifically, the price of good one is p1 if less than x units are bought and it is p1(1 + t) when buying more than x units (for all the units bought). Where t indicates the...
Luke's choice behavior can be represented by the utility function u(x1,x2)= x1 + x2
Luke's choice behavior can be represented by the utility function u(x1,x2)= x1 + x2.The prices of x1 and x2 are denoted as p1 and p2, and his income is m. 1. Draw at least three indifference curves and find its slope (i.e. MRS). Is the MRS changing depending on the points of (x1, x2) at which it is evaluated, or constant? 2. Draw a budget constraint assuming that p1 < P2. Find the optimal bundle (x1*,x2*) as a function of income and prices. 3....
Suppose a consumer has a utility function U (x1,x2) = Inxi + x2. The consumer takes...
Suppose a consumer has a utility function U (x1,x2) = Inxi + x2. The consumer takes prices (p1 and p2) and income (I) as given 1) Find the demand functions for x1 and x2 assuming -> 1. What is special about Р2 these demand functions? Are both goods normal? Are these tastes homothetic? <1. You probably P2 2) Now find the demand functions for x1 and x2 assuming assumed the opposite above, so now will you find something different. Explain....
Suppose a consumer has a utility function U(x1, x2) = Inxi + x2. The consumer takes...
Suppose a consumer has a utility function U(x1, x2) = Inxi + x2. The consumer takes prices (p1 and p2) and income (I) as given. > 1. What is special about P2 1) Find the demand functions for and x2 assuming these demand functions? Are both goods normal? Are these tastes homothetic? 2) Now find the demand functions for x1 and x2 assuming-<1. You probably P2 assumed the opposite above, so now will you find something different. Explain 3) Graph...
Consider a consumer with a utility function u(x1, x2) = min{21, 222}. Suppose the prices of...
Consider a consumer with a utility function u(x1, x2) = min{21, 222}. Suppose the prices of good 1 and good 2 are p1 = P2 = 4. The consumer's income is m = 120. (a) Find the consumer's preferred bundle. (b) Draw the consumer's budget line. (c) On the same graph, indicate the consumer's preferred bundle and draw the indifference curve through it. (d) Now suppose that the consumer gets a discount on good 1: each unit beyond the 4th...
An individual has the utility function: U(x1,x2,x3) = ln x1 + ln x2 + 0.5ln x3....
An individual has the utility function: U(x1,x2,x3) = ln x1 + ln x2 + 0.5ln x3. The price of good x1 is p1, the price of good x2 is p2 = 1 and the price of good x3 is p3. The individual’s income is I. Derive the Marshallian demand functions (x1* , x2*, x3* ).
A consumer has preferences represented by the utility function: u(21,12)=x2? Market prices are p1 = 2 and P2 = 5. The consumer has an income m = 13. Find an expression for the consumer's demand for good 1,21 (P1). 39p1
1 pts Question 2 A consumer has preferences represented by the utility function: u(x1, x2)= x x Market prices are pi = 3 and P2 = 4. The consumer has an income m 30. Find an expression for the consumer's Engel curve for good 1. x1(m). ооо D Question 3 1 pts
Suppose a consumer has a utility function U (x1,x2) = Inxi + x2. The consumer takes prices (p1 and p2) and income (I) as given 1) Find the demand functions for x1 and x2 assuming -> 1. What is special about Р2 these demand functions? Are both goods normal? Are these tastes homothetic? <1. You probably P2 2) Now find the demand functions for x1 and x2 assuming assumed the opposite above, so now will you find something different. Explain....
Suppose a consumer has a utility function U(x1, x2) = Inxi + x2. The consumer takes prices (p1 and p2) and income (I) as given. > 1. What is special about P2 1) Find the demand functions for and x2 assuming these demand functions? Are both goods normal? Are these tastes homothetic? 2) Now find the demand functions for x1 and x2 assuming-<1. You probably P2 assumed the opposite above, so now will you find something different. Explain 3) Graph...
Consider a consumer with a utility function u(x1, x2) = min{21, 222}. Suppose the prices of good 1 and good 2 are p1 = P2 = 4. The consumer's income is m = 120. (a) Find the consumer's preferred bundle. (b) Draw the consumer's budget line. (c) On the same graph, indicate the consumer's preferred bundle and draw the indifference curve through it. (d) Now suppose that the consumer gets a discount on good 1: each unit beyond the 4th...
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