How to prove that the independence axiom must be true for a set of preferences that can be represented by expected utili...
How to prove that the independence axiom must be true for a set of preferences that can be represented by expected utility function?
Homework Answers
Expected utility theorem states that the value associated with a person's gamble is the statistical value that a person attaches to the result expected out of that trail. In order for a person's decision to be compliant with Expected utility Theorem, four axioms must hold true, namely: Completeness, Transitivity, Independence and Continuity.
Independence axiom states that the two gambling scenarios when combined with a third gambling scenario which is irrelevant to the preference, then the preference order remains same as that without the presence of third gambling option.
Add Answer to:
How to prove that the independence axiom must be true for a set of preferences that can be represented by expected utili...
The Independence Axiom of expected utility states that the preference relation is such that: L a...
The Independence Axiom of expected utility states that the preference relation is such that: L a L b ⇐⇒ αLa + (1 − α)L c αLb + (1 − α)L c . Note that ⇐⇒ means “is equivalent to.” What does is mean in the language of economics and finance?
ots) Mark has preferences that can be represented by the following utility function: U(x,y)= (18+x)(+1). Sarah's...
ots) Mark has preferences that can be represented by the following utility function: U(x,y)= (18+x)(+1). Sarah's utility function is v) 6x +60 y - 4x + 2xy - 24 y +29: Do Mark and Sarah have the same preferences? You must prove your answer. U (x, y) = 6x+60 y - 4x + 2
Suppose that a decision-maker’s preferences over the set A={a, b, c} are represented by the payoff...
Suppose that a decision-maker’s preferences over the set A={a, b, c} are represented by the payoff function u for which u(a) = 0, u(b) = 1, and u(c) = 4. (a) Give another example of a function f:A→R that represents the decision-maker’s preferences. (b) Is there a function that represents the decision-maker’s preferences and assigns negative numbers to all elements of A?
Suppose that a decision-maker’s preferences over the set A={a, b, c} are represented by the payoff...
Suppose that a decision-maker’s preferences over the set A={a, b, c} are represented by the payoff function u for which u(a) = 0, u(b) = 1, and u(c) = 4. (a) Give another example of a function f:A→R that represents the decision-maker’s preferences. (b) Is there a function that represents the decision-maker’s preferences and assigns negative numbers to all elements of A?
please show all steps 10. A consumer's preferences over bundles of two goods can be represented...
please show all steps
10. A consumer's preferences over bundles of two goods can be represented by the utility function where a >1. (a) State the consumer's utility maximization problem (b) Determine whether an assumed interior solution satisfies the second-order condition for this problem. (c) Find the consumer's (Marshallian) demand function. (d) Find the indirect utility function. (e) Find the expenditure function. (f) Find the indirect money metric utility function.
3. Suppose an individual has perfect-complements preferences that can be represented by the utility function U(x,y)=...
3. Suppose an individual has perfect-complements preferences that can be represented by the utility function U(x,y)= min[3x,2y]. Furthermore, suppose that she faces a standard linear budget constraint, with income denoted by m and prices denoted by px and p,, respectively. a) Derive the demand functions for x and y. b) How does demand for the two goods depend on the prices, p, and p, ? Explain.
Suppose there are two consumption goods and preferences of a consumer can be represented by the following utility functi...
Suppose there are two consumption goods and preferences of a
consumer can be represented by the following utility function:
;
a) Derive the Marshallian demand function of this consumer.
b) Calculate and intuitively interpret the elasticity of
substitution.
d/11027(0 - 1) + 10) = (2x Iz)n (0<a <1:0 +p<1)
Exercise 2: Expenditure minimization We assume an individual whose preferences can be represented by the utility...
Exercise 2: Expenditure minimization We assume an individual whose preferences can be represented by the utility functions | Ưới a) = 8 * @a An expenditure-minimizing consumer would try to minimize the amount they spend on both and rach that their utility is at least as high as some set level of utility U. Mathematically, we thus have minha + P such that Ul. 22) 20 1. Please write the Lagrangan formula corresponding to this particular optimization set up oynundo...
5. A consumer faces a standard linear budget constraint and has preferences that can be represented...
5. A consumer faces a standard linear budget constraint and has preferences that can be represented by the following utility function: U(x,y)= x + 2 In y. a) Suppose that we have an interior solution. Derive the demand functions for x and y. Denote the price of x by p,, the price of y by p,, and income by m. b) Is it necessarily the case that the optimal consumption is interior the way we assumed in part a)? If...
2. An individual's preferences over food (F) and clothing (C) are represented by the utility function...
2. An individual's preferences over food (F) and clothing (C) are represented by the utility function U(F, C)FiC. She currently has 9 units of food and 8 units of clothing According to her MRS, she would be willing to give up a maximum of 4/3 units of food to obtain one more piece of clothing. a. True b. False
ots) Mark has preferences that can be represented by the following utility function: U(x,y)= (18+x)(+1). Sarah's utility function is v) 6x +60 y - 4x + 2xy - 24 y +29: Do Mark and Sarah have the same preferences? You must prove your answer. U (x, y) = 6x+60 y - 4x + 2
please show all steps
10. A consumer's preferences over bundles of two goods can be represented by the utility function where a >1. (a) State the consumer's utility maximization problem (b) Determine whether an assumed interior solution satisfies the second-order condition for this problem. (c) Find the consumer's (Marshallian) demand function. (d) Find the indirect utility function. (e) Find the expenditure function. (f) Find the indirect money metric utility function.
3. Suppose an individual has perfect-complements preferences that can be represented by the utility function U(x,y)= min[3x,2y]. Furthermore, suppose that she faces a standard linear budget constraint, with income denoted by m and prices denoted by px and p,, respectively. a) Derive the demand functions for x and y. b) How does demand for the two goods depend on the prices, p, and p, ? Explain.
Suppose there are two consumption goods and preferences of a
consumer can be represented by the following utility function:
;
a) Derive the Marshallian demand function of this consumer.
b) Calculate and intuitively interpret the elasticity of
substitution.
d/11027(0 - 1) + 10) = (2x Iz)n (0<a <1:0 +p<1)
Exercise 2: Expenditure minimization We assume an individual whose preferences can be represented by the utility functions | Ưới a) = 8 * @a An expenditure-minimizing consumer would try to minimize the amount they spend on both and rach that their utility is at least as high as some set level of utility U. Mathematically, we thus have minha + P such that Ul. 22) 20 1. Please write the Lagrangan formula corresponding to this particular optimization set up oynundo...
5. A consumer faces a standard linear budget constraint and has preferences that can be represented by the following utility function: U(x,y)= x + 2 In y. a) Suppose that we have an interior solution. Derive the demand functions for x and y. Denote the price of x by p,, the price of y by p,, and income by m. b) Is it necessarily the case that the optimal consumption is interior the way we assumed in part a)? If...
2. An individual's preferences over food (F) and clothing (C) are represented by the utility function U(F, C)FiC. She currently has 9 units of food and 8 units of clothing According to her MRS, she would be willing to give up a maximum of 4/3 units of food to obtain one more piece of clothing. a. True b. False
Most questions answered within 3 hours.
-
One of the major advantages of ______________ is to enhance
security for private networks by keeping...
asked 3 minutes ago -
Book:
Title: Framework for
Marketing Management, 15th edition
Author/s: Philip T.
Kotler, Kevin Lane Keller
1....
asked 12 minutes ago -
Given Uber’s recent corporate turbulence and ongoing
initiatives, provide a holistic situational analysis of the
environment...
asked 15 minutes ago -
A sculptor has hung up a 42.0 kg horizontal rod of length 4.80 m
. One...
asked 18 minutes ago -
What is the purpose of the 2' hydroxyl group in RNA? What is
the reason this...
asked 37 minutes ago -
You currently have 20,000X ethidium bromide. You want to make
250 mL of 1X ethidium bromide...
asked 49 minutes ago -
What mass of lead is needed to absorb 348 J of heat if the temp
of...
asked 52 minutes ago -
Explain the difference between an auction with reserve
and an auction without reserve. if not specified,...
asked 54 minutes ago -
Write the net ionic equation for the precipitation reaction that
occurs when aqueous solutions of aluminum...
asked 57 minutes ago -
How do we find the slope distance, given the horizontal distance
and the zenith angle?
For...
asked 56 minutes ago -
The table to the right lists probabilities for the corresponding
numbers of girls in three births....
asked 1 hour ago -
The inverse demand function for good X is P = 5−0.05Q. The
firm’s cost curve is...
asked 1 hour ago