An individual's demand for X is given by the following function: X = 300 - 4P+0.01M,...
2. Suppose the individual demand for consumer 1 is D1(p)=200-4p and for consumer 2 is D2(p)=125-2.5p. Assume there is only one producer in the economy who supplies S(p). a. Graph the individual demand curves as well as the resulting market demand curve. Mark the intercepts correctly. b. What is the price elasticity of the Market Demand at p=10? c. If supply is given by p = 40, find the amount purchased by each consumer. Illustrate your answer graphically. d. If...
3. (10 points) Income and substitution effects A consumer's utility is given by U(x, y) = xy. Income is m and prices are given by p and Py (a) Find the demand functions for x and y. (b) What is demand for each good if p 2 and py 1 and income is m = (c) If price of x fell to pa 1, what is the consumer's new bundle? (d) How much of the response in the consumption of...
3. A consumer's preferences over a and y are given by the utility function u(x,y) - 2vr 2/y. The individual's income is I $100. The price of a unit of good c is $2, while the price of a unit of good y is S1. a) Graphically describe: i. the consumer's preferences for r and y ii. the budget constraint (b) Find the optimal x that the consumer would choose. You may assume (c) What is the consumer's MRS at...
Question 2 (20 points) A consumer purchases two goods x ano y. The consumer's income is 1. Hi S income is 1. His utility is given by is * and y. Px is the price of x. Py is the price of a) Calculate consumer's optim U(x,y) = xy s optimal choice of x and y under his budget.hu uncompensated demand) b) Derive the indirect utility function. c) Are these two goods normal goods? Why d) Derive the expenditure function....
8) Suppose a consumer's utility function is defined by u(x,y)=3x+y for every x>0 and y>0 and the consumer's initial endowment of wealth is w=100. Graphically depict the income and substitution effects for this consumer if initially P=1 P, and then the price of commodity x decreases to Px=1/2. 10 pts
3. (14 points) A consumer's utility function is given by U(x,y) = x1/2y1/2 (1) Find the consumer's Marshallian demand functions. (2) Find the consumer's compensated demand functions. (3) Suppose the price of good y is Py = $1 per unit and the consumer's income is 1 = $20. Find the total effects on good x and good y when the price of good x increases from px - $1 per unit to p} = $2 per unit.
John has the following utility function that represents his preferences over food (x) and housing (y) (his only two expenses) and marginal utilities: มุ4 for a level of wealth W and prices of food and housing P y respectively. Using the results from the previous homework answer the following questions Write down the Engel Curve for both goods and graph them 2) Assume W-10 and the price of food changes from 1 to 3 while the price of housing remains...
Aahba's demand function for x is given by x(Px, P,m) = m . Her income is $800 per month. The current price of x is $5 and the price of y is $20. ✓ 1st attempt Part 1 (2 points) See Hint If the price of x falls to $4, then Aahba's demand for x will change from units to units. Part 2 (2 points) See Hint If Aahba's income were to change at the same time, so that she...
4. Given the estimated demand function for good 1: Q = 50 - 4P,-3.2P, + 0.017, where P, and P, are prices for good 1 and 2, respectively, and Y is income. (a) (2 points) Are good 1 and good 2 complements or substitutes? Why? (b) (3 points) Calculate the cross-price elasticity of demand for good 1, with respect to the price of good 2, given P, = $1.20, P, = 3.50, and Y = $15,000.
A consumer's utility is given by U (,y) = ry. Income is m and prices are given by pa and Py. (aFind the demand functions for x and y. (b) What is demand for each good if px = 2 and pu= 1 and income is m = 30? (c) If price of x fell to pc = 1, what is the consumer's new bundle? (d) How much of the response in the consumption of x is due to the...