X axis shows good X1, Y axis shows good X2.
Quantity that can be bought : X1=m/p1 and X2=m/p2.
For (a). X1=5 and X2=5. Plot (5,0) and (0,5) on the graph. Line AB is the budget line and area AOB is the budget set that the consumer can afford.
For (b) X1=10 and X2=5. Plot (10,0) and (0,5) on the graph. Line AB is the budget line and area AOB is the budget set that the consumer can afford.
For (c) X1=5 and X2=2.5. Plot (5,0) and (0,2.5) on the graph. Line AB is the budget line and area AOB is the budget set that the consumer can afford.
For (d) X1=5 and X2=5. Plot (5,0) and (0,5) on the graph. Line AB is the budget line and area AOB is the budget set that the consumer can afford.
Q1 Budget Set Problem 1 Depict the budget set of the consumer in each of the...
Given the following utility function:
Where, q1 and q2 are consumer goods and the budget
constraint is given as.
With p, and p the prices of the goods and the month
the income. Find.
1. The Marshallian Demands for (q1 and 92.
2. The Indirect Utility Function, V (p1, p2, m)
3. The Hicksian Demands for q1 and q2.
4. The Expenditure Function, m (p1, p2, U)
U(992)=9, +10 log2 U(992)=9, +10 log2
The utility function of the consumer is u(x1,x2) = (10x1 + x2). a) Plot all the consumption bundles that gives the consumer utility 100. (3 points) b) Plot all the consumption bundles that gives the consumer utility 144. (3 points) c) Plot the budget constraint when p. = 10,P2 = 10 and m = 100 (3 points) d) Plot the budget constraint when P1 = 20, P2 = 5 and m = 60 (3 points) e) What is the optimal...
Question 1 (20 points). The utility function of the consumer is u(x1, x2) = x1 + x2. a) Let pı = 2 ,P2 = 20 and m = 24. Calculate the optimal quantity demanded of good 1 and 2. (7 points) b) Let p1 = 1,P2 = 4 and m = 100. Calculate the optimal quantity demanded of good 1 and 2. (6 points) c) Let P1 = 1, p2 = 4 and m = 4. Compared to point b),...
This table contains prices and the demands of a consumer whose behavior was observed in 5 different price-income situations. Situation P1 P2 X1 X2 A 2 2 10 70 B 2 4 70 20 C 2 2 20 30 D 6 2 10 30 E 2 4 20 20 A. Sketch each of his budget lines and label the point chosen in each case by the letters A, B, C, D, and E. B. Is the consumer’s behavior consistent with...
2) (18 points) For each of the following situations, draw the consumer's budget constraint and indicate the consumer's optimal bundle on the budget constraint. Make sure your graph is accurate and clearly labeled. a) U(X,Y)-X14Y34. The consumer has $24 to spend and the prices of the goods are Px S2 and Py S3. Note that the MUx-(1/4)X-3*Y34 and the MUy (3/4)X14Y-14. b) U(X,Y)-MIN(5X,Y). The consumer has S24 to spend and the prices of the goods are Px S3 and Py...
2) (18 points) For each of the following situations, draw the consumer's budget constraint and indicate the consumer's optimal bundle on the budget constraint. Make sure your graph is accurate and clearly labeled. a) U(X,Y)-X1"Y34. The consumer has S24 to spend and the prices of the goods are Px - S2 and Py S3. Note that the MUx-(1/4)X-3*Y34 and the MUy (3/4)X14Y-14. b) U(X,Y) MIN(5X,Y). The consumer has S2 4 to spend and the prices of the goods are Px...
Draw the consumer’s budget constraint and indicate the
consumer’s optimal bundle on the budget constraint. Make sure your
graph is accurate and clearly labeled.
c) U(X,Y) 2X +3Y. The consumer has $20 to spend and the prices of the goods are Px $2 and Py $4.
Consumer elasticity Solve and evaluate the type of consumer elasticity. Please include computations. 1. Solve and identify (if it is clastic, inelastic or unit demand) the coefficient of the price elasticity of demand, if 1.1 Q, = 5 P1 = $6 Q2 = 12 P2 = $2 1.2 Q1 = 10 P1 = $6 Q2 = 3 P2 = $18 1.3 Q. = 40 P = $8 Q2 = 60 P2 = $12 2. Solve and identify (if they are...
1. Prove mathematically, using Jensen’s inequality, that the budget set for a consumer choice problem with 2 goods, fixed prices and consumer wealth, and no ability to consume negative quantities, is a convex set.
A consumer has the following preferences u(11, 12) = log (11) + 12 Suppose the price of good 1 is pı and the price of good 2 is P2. The consumer has income m. (a) Find the optimal choices for the utility maximization problem in terms of P1, P2 and m. Denote the Lagrange multiplier by 1. (b) How do the optimal choices change as m increases? What does the income offer curve (also called the income expansion path) look...