Yam has the following utility function for Apples (X1) and Ice Cream (X2) U(X1,X2) = Min{3X1,X2}....
- Yam has the following utility function for Apples (X1) and Ice Cream (X2)
U(X1,X2) = Min{3X1,X2}.
- Draw Yam’s indifference curves when she consumes 1 and 2 apples.
- Derive Yam’s demand functions for Apples and Ice Cream.
Suppose Yam has an income of M = $120 and the prices of Apples and Ice Cream are p1 =$1, p2 =$1.
- What is Yam’s optimal consumption of Apples and Ice Cream?
Suppose a quantity tax of $1 is imposed on Apples.
- Separate out the substitution and income effects of this price change and carefully discuss your answer.
Homework Answers
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Yam has the following utility function for Apples
(X1) and Ice Cream (X2)
U(X1,X2) =
Min{3X1,X2}....
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