HomeworkLib
Question

4. Suppose U(x1, x2) = 2lnx1 + 3lnx2 and P1 = 4, P2 = 1, and...

4. Suppose U(x1, x2) = 2lnx1 + 3lnx2 and P1 = 4, P2 = 1, and m = 20. (4pts) Set up the Lagrangian for this problem (but do not solve it)

5. Suppose U(x1, x2) = min{5x1, x2}. (8pts) Write out the Marshallian demands for x1 and x2, as functions of p1, p2, and m. Now, solve for these when P1 = 3, P2 = 1, and m = 16. Is this an interior or corner solution? Is the budget exhausted here? Yes/no

6. Suppose U(x1, x2) = 2.5x1 + 7.5x2 (10pts) Write out the Marshallian demands for x1 and x2, as functions of p1, p2, and m. (Hint: there will be more than one solution based on the MRT and MRS values!) Now, solve for these when P1 = 6, P2 = 4, and m = 36. Is this an interior or corner solution? Is the budget exhausted here? Yes/no

7. Suppose U(x1, x2) = x12x2 (12pts) Solve for the marshallian demands for x1 and x2, as functions of p1, p2, and m. Is this an interior or corner solution? Is the budget exhausted here? Yes/no Assume that the above prices and income have all doubled. How does this change your solution in a?

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

0 0
Add a comment
Know the answer?
Add Answer to:
4. Suppose U(x1, x2) = 2lnx1 + 3lnx2 and P1 = 4, P2 = 1, and...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • 1. Suppose U(X1, X2) = 2lnx, + 3lnx, and P, = 4, P2 = 1, and...

    1. Suppose U(X1, X2) = 2lnx, + 3lnx, and P, = 4, P2 = 1, and m = 20. (15pts) a. Solve for the Utility maximizing amounts of x, and X2. b. Is this an interior or corner solution? c. Is the budget exhausted here? Yes/no d. Assume that the above prices and income have all doubled. How does this change your solution in a? e. Set up the Lagrangian for this problem (but do not solve it) 2. Suppose...

  • 7. Suppose U(X., X) = X.-X, (12pts) a. Solve for the marshallian demands for x, and...

    7. Suppose U(X., X) = X.-X, (12pts) a. Solve for the marshallian demands for x, and X, as functions of p1, p2, and m. b. Is this an interior or corner solution? C. Is the budget exhausted here? Yes/no d. Assume that the above prices and income have all doubled. How does this change your solution in a?

  • U(x, y) = x1ax2(1-a) a. Solve for the marshallian demands for x1 and x2, as functions...

    U(x, y) = x1ax2(1-a) a. Solve for the marshallian demands for x1 and x2, as functions of p1, p2, and m. (Hint: your solutions will be equations, not numbers). b. For x1 find the own-price elasticity and income elasticity. c. Suppose a = 0.2, m = 100, p1 = 2, and p2=8, find the quantities of x1 and x2. d. happens to these quantities when p1 doubles to $4? e. What does this say about the price consumption curve (PCC)?

  • U(x, y) = x1ax2(1-a) Solve for the marshallian demands for x1 and x2, as functions of...

    U(x, y) = x1ax2(1-a) Solve for the marshallian demands for x1 and x2, as functions of p1, p2, and m. (Hint: your solutions will be equations, not numbers). For x1 find the own-price elasticity and income elasticity. Suppose a = 0.2, m = 100, p1 = 2, and p2=8, find the quantities of x1 and x2. What happens to these quantities when p1 doubles to $4? What does this say about the price consumption curve (PCC)? 2. Suppose the price...

  • Solve for the optimal x1^*(p1, p2, m) and x2^*(p2, p1, m) for a utility function, U(x1,...

    Solve for the optimal x1^*(p1, p2, m) and x2^*(p2, p1, m) for a utility function, U(x1, x2) = x1x2 - x1 - x2. Could you please take a picture of your work on a piece of paper? Thanks.

  • 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...

  • Show all work please. 1. U(x, y) x,ax,1-a) a. Solve for the marshallian demands for x,...

    Show all work please. 1. U(x, y) x,ax,1-a) a. Solve for the marshallian demands for x, and x2, as functions of p1, p2, and m. (Hint: your solutions will be equations, not numbers). (4pts) b. For x, find the own-price elasticity and income elasticity. (4pts) c. Suppose a = d. What happens to these quantities when p1 doubles to $4? (4pts) e. What does this say about the price consumption curve (PCC)? (4pts) 100, p1 2, and p2=8, find the...

  • NEED Question #2 1. U(x, y) = x1ax2(1-a) a. Solve for the marshallian demands for x1...

    NEED Question #2 1. U(x, y) = x1ax2(1-a) a. Solve for the marshallian demands for x1 and x2, as functions of p1, p2, and m. (Hint: your solutions will be equations, not numbers). b. For x1 find the own-price elasticity and income elasticity. c. Suppose a = 0.2, m = 100, p1 = 2, and p2=8, find the quantities of x1 and x2. d. What happens to these quantities when p1 doubles to $4? e. What does this say about...

  • Q6 Deriving Demand Function Derive demand functions x1(P1, P2, m) and x2(P1, P2, m) for the...

    Q6 Deriving Demand Function Derive demand functions x1(P1, P2, m) and x2(P1, P2, m) for the consumer with the utility function U(x1, x2) = xi x2

  • Question-3 Suppose the consumer’s utility function is given by U (x1 , x2 ) = x1x...

    Question-3 Suppose the consumer’s utility function is given by U (x1 , x2 ) = x1x 2 2 . Let the prices of good 1, good 2 be p1 , p2 , and suppose this consumer wants to reach a level of utility U (a) [2] Formulate the consumer’s problem in terms of the Lagrangian (b) [5] Derive the Hicksian demands for this consumer (c) [3] What is the expenditure for this consumer. (d) [5] Show that x H (...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT