if U(x1,x2)= (x1-9)^2+(x2-4)^2 what is the demand function of x1 (be aware, this is a circle)
Solution-
Marshallian demand function expresses the demand function of any good in terms of prices and income level.
Suppose p1 be the price of good x1 and p2 be the price of good x2.
Optimal condition will be where MUx1/ MUx2=p1/p2
if U(x1,x2)= (x1-9)^2+(x2-4)^2 what is the demand function of x1 (be aware, this is a circle)
Jerami's utility function is given by U(x1,x2) = 2x1 +2X2. What is his demand for each good if P1 = 4,P2 =6, and m=60? x1 = 6; x2 = 6 x1 =0:x2 - 10 x1 = 15; x2 = 0 O x1 = 60; x2 = 0
1. Consider the utility function: u(x1,x2) = x1 +x2. Find the corresponding Hicksian demand function 2. For each of the three utility functions below, find the substitution effect, the income effect, and the total effect that result when prices change from p = (2,1) to p' = (2,4). Assume the consumer has income I = 20. (a) Before doing any calculation, make an educated guess about the relative magnitude of the three substitution effects and the three income effects to be found below. (b)...
What is the MRS of the utility function, u = x1 2/4 ∙ x2 1/4?
What is the MRS of the utility function, u = x1 2/4 + x2 1/4 ?
1. Consider the utility function: u(x1,x2) = x1 + x2. Find the corresponding Hicksian demand function. 2. For each of the three utility functions below, find the substitution effect, the income effect, and the total effect that result when prices change from p =(2, 1) to p' = (2,4). Assume the consumer has income I = 20. (a) Before doing any calculation, make an educated guess about the relative magnitude of the three substitution effects and the three income effects...
1. Consider the utility function: u(x1,x2) = x1 + x2. Find the corresponding Hicksian demand function. 2. For each of the three utility functions below, find the substitution effect, the income effect, and the total effect that result when prices change from p = (2,1) to p' = (2,4). Assume the consumer has income I = 20. (a) Before doing any calculation, make an educated guess about the relative magnitude of the three substitution effects and the three income effects...
The consumer has the utility function U(x1 , x2) = (x1-2)4 (x2-3)3, subject to her budget constraint 10 = 4x1 + 3x2. Write the utility maximization of this consumer using the Lagrangian method and find the optimal value of x1 and x2.
Donald consumes goods x1 and x2. His utility function is U(x1, x2) = x1(x2)3. He is endowed with 43 units of x1 and 7 units of x2. The price of x1 is $1 and the price of x2 is $3. Find his net demand for x1. a) b) c) d) e)
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....
1) Optimization problem 1 Max U(x, y) = x1^0.5 + x2^0.5 s.t. x1 + x2 =16 Find the optimum bundle; check if there is a minimum or a maximum. 2) Give the interpretation of the expenditure function, explain and show its properties. Draw the diagram of the expenditure function. Derive the compensated demand function for x1 and x2 E( p, u) = p(p1. p2)^0,5 and the uncompensated demand function. 3) Derive the expenditure function when the direct utility function...