A preference-maximising consumer consumes two commodities. The prices of the commodities are denoted by p1 and...
A preference-maximising consumer consumes two commodities. The prices of the commodities are denoted by p1 and p2, and the consumer’s income is denoted by I. The indirect utility function of the consumer is: V (p1, p2, I) = I2/4p1(p2 − p1) .
Find the underlying utility function that would have generated it.
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A preference-maximising consumer consumes two commodities. The
prices of the commodities are denoted by p1 and...
Consider a preference-maximising consumer who consumes two commodities. The preferences of the consumer are given by...
Consider a preference-maximising consumer who consumes two commodities. The preferences of the consumer are given by the utility function U(x1, x2) = x1. (a) Comment on the homotheticity of the consumer’s preferences.
Consider a preference-maximising consumer who consumes two commodities. The preferences of the consumer are given by...
Consider a preference-maximising consumer who consumes two commodities. The preferences of the consumer are given by the utility function U(x1, x2) = x1. (a) Comment on the monotonicity and convexity of the consumer’s preferences.
] Consider a preference-maximising consumer who consumes two commodities. The preferences of the consumer are given...
] Consider a preference-maximising consumer who consumes two commodities. The preferences of the consumer are given by the utility function U(x1, x2) = x1. Find the demand functions for the goods.
A preference-maximising consumer’s expenditure function is e(p1, p2, u) = p2(4p1u − p2)/ 4p1 . Suppose...
A preference-maximising consumer’s expenditure function is e(p1, p2, u) = p2(4p1u − p2)/ 4p1 . Suppose that the prices of the goods are initially p 0 1 = 1, p 0 2 = 4, and that the consumer’s income is $120. The prices change to p 1 1 = 2, and p 1 2 = 2 with no change in the consumer’s income. Find the equivalent variation and the compensating variation associated with these price changes. Interpret the numbers you...
A preference-maximising consumer’s expenditure function is e(p1, p2, u) = p2(4p1u − p2)/ 4p1 . Suppose...
A preference-maximising consumer’s expenditure function is e(p1, p2, u) = p2(4p1u − p2)/ 4p1 . Suppose that the prices of the goods are initially p 0 1 = 1, p 0 2 = 4, and that the consumer’s income is $120. The prices change to p 1 1 = 2, and p 1 2 = 2 with no change in the consumer’s income. Find the consumer’s consumption bundles at the initial and new prices. For each commodity, partition the change...
A consumer only consumes two commodities, x1 and x2. If x2 is an inferior good, and...
A consumer only consumes two commodities, x1 and x2. If x2 is an inferior good, and if p1 goes up, do the resulting Income and Substitution Effect on good 2 work in the same direction as each other, or in opposite directions of each other?
A consumer only consumes two commodities, x1 and x2. If x2 is an inferior good, and...
A consumer only consumes two commodities, x1 and x2. If x2 is an inferior good, and if p1 rises, do the resulting income and substitution effects on good 2 work in the same direction as each other, or in opposite directions from each other?
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
UES TION 16 A consumer consumes two commodities, m and n, and has a utility function...
UES TION 16 A consumer consumes two commodities, m and n, and has a utility function z = mn. The price of M is Pm- $10 and the price of n is P $40 and the income of the consumer is Y- $180. As you kno optimal bundle there will be a tangency between one of the indifference curves and the budget line. In other words, the slope of the indifference curve and the slope of the budget line will...
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...
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
UES TION 16 A consumer consumes two commodities, m and n, and has a utility function z = mn. The price of M is Pm- $10 and the price of n is P $40 and the income of the consumer is Y- $180. As you kno optimal bundle there will be a tangency between one of the indifference curves and the budget line. In other words, the slope of the indifference curve and the slope of the budget line will...
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...
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