ZuoTi.Pro
Question

Question 1 1 4 5 .5 U (x1,x2)=xix2 Kim has the utility function a) Set up the Lagrangian and derive an expression for the mar

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

Homework Answers

Answer #1

Please see the answer below:

15 for 415 U = x, . - U= as alles in a Page 1 a) Lagrangean - b= cm5+ a CM - Pr24 – P222) FEC: 2 = 0 > $(47)915 - 12,50 @. 1

+()“ хе. - 4 )**, — в 2 x P, - Чех Budget Constraint: 1. Pat P2 X = M Р. + ЧРx = 9 5e, x, м | | | Alу — ® Put in ean. + P = ч

MRSa4 x = MOL MUX2 Page 3 - Dulon วง() 5 euros MR.SA, 12 = 11 (12) Am b) x, and da will be Normal Goods if their Income Elast

from egn. ovo so (R20 So, ay is also a NORMAL GOOD. c) 15 P, = 2, P2=4 ,M= 150 for x, 0,= 150 (using eqn. A x = 15 10 30 2 -

Page 5 36 for si het ny M ( - X 150 (int) 2-75 02 x 150 (using egn. © = 30 So ed = -7.5x4 1. ed = 1 Do you expect elasticity

mano - Page 6 d) Since, the elasticity of demand = 1, total revenue is maximized by selling following quantity of x, : Since,

0 0
Add a comment
Know the answer?
Add Answer to:
Question 1 1 4 5 .5 U (x1,x2)=xix2 Kim has the utility function a) Set up...
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

  • I need step by step solution to the following this question asap .I have limited time...

    I need step by step solution to the following this question asap .I have limited time so please do it quickly with detailed explanation thanks in advance/Ha Kim has the utility function U(x1,x2) = NU a) Set up the Lagrangian and derive an expression for the marginal rate of substitution and calculate the Marshallian demand for both goods. (9p) b) Are both goods normal goods to Kim? (4p) c) Calculate the price elasticity of demand for both goods at prices...

  • Robin has the utility function U ( x1 , x2)= 1/ 5 ln ( x1 )+...

    Robin has the utility function U ( x1 , x2)= 1/ 5 ln ( x1 )+ 4 /5 ln ( x2 ) . a) Set up the Lagrangian and derive an expression for the marginal rate of substitution and calculate the Marshallian demand for both goods. b) What will happen to Robin’s share of expenditures on good x1 if the price of good one, p1 , increases. Verify your conclusion formally!

  • 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...

  • An individual has the utility function: U(x1,x2,x3) = ln x1 + ln x2 + 0.5ln x3....

    An individual has the utility function: U(x1,x2,x3) = ln x1 + ln x2 + 0.5ln x3. The price of good x1 is p1, the price of good x2 is p2 = 1 and the price of good x3 is p3. The individual’s income is I. Derive the Marshallian demand functions (x1* , x2*, x3* ).

  • Q1. Sam consumes two goods x1 and x2. Her utility function can be written as U(x1,x2)=x...

    Q1. Sam consumes two goods x1 and x2. Her utility function can be written as U(x1,x2)=x 1raised to 2/3 and x 2 raised to 1/5 ⁄. Suppose the price of good x1 is P1, and the price of good x2 is P2. Sam’s income is m. [20 marks] a) [10 marks] Derive Sam’s Marshallian demand for each good. b) [5 marks] Derive her expenditure function using indirect utility function. c) [5 marks] Use part c) to calculate Hicksian demand function...

  • 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) Find the demand functions for x1 and x2 assuming -> 1. What is special about Р2 these demand functions? Are both goods normal? Are these tastes homothetic? <1. You probably P2 2) Now find the demand functions for x1 and x2 assuming assumed the opposite above, so now will you find something different. Explain....

  • 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...

  • 2. (25%) Consider a consumer with preferences represented by the utility function: u(x1, x2) = min...

    2. (25%) Consider a consumer with preferences represented by the utility function: u(x1, x2) = min {axı, bx2} If the income of the consumer is w > 0 and the prices are p1 > 0 and P2 > 0. (a) Derive the Marshallian demands. Be sure to show all your work. (b) Derive the indirect utility function. (c) Does the utility function: û(x1, x2) = axı + bx2 represent the same preferences?

  • Suppose an individual’s utility function is u=x11/2, x21/2. Let p1=4, p2=5, and income equal $200. With...

    Suppose an individual’s utility function is u=x11/2, x21/2. Let p1=4, p2=5, and income equal $200. With a general equation and general prices, derive the equal marginal principle. Graphically illustrate equilibrium and disequilibrium conditions and how consumers can reallocate their consumption to maximize utility. What is the optimal amount of x1 consumed? What is the optimal amount of x2 consumed? What is the marginal rate of substitution at the optimal amounts of x1 and x2? As functions of p1, p2, and...

  • 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...

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
ADVERTISEMENT