ZuoTi.Pro
Question

7. Shawn has quasi linear preferences, linear in x2. His utility function is given by U (x1, x2) = In(xı) + x2 I (a) Compute

Hi, please solve . Thank you

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

Homework Answers

Answer #1

U (n. ,%). ln (2) +de 6 M U. 2 U (2,1) 2 a [ln (2) + X₂ aa, M U a UL, X2) an 2 a [ln (21) + Hp an Marginal Rate of substitutiPrice of an Pi Price of Pe Income, and So Budget line time can be given by P. XI + P e Xo Y .. ① optimalily occur at a point

0 0
Add a comment
Know the answer?
Add Answer to:
Hi, please solve . Thank you 7. Shawn has quasi linear preferences, linear in x2. His utility function is given by U...
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

  • Suppose a consumer has quasi-linear utility: u(x1, x2) = 3.01 + x2. The marginal utilities are...

    Suppose a consumer has quasi-linear utility: u(x1, x2) = 3.01 + x2. The marginal utilities are MU(X) = 2x7"! and MU2:) = 1. Throughout this problem, assume P2 = 1. (a) Sketch an indifference curve for these preferences (label axes and intercepts). (b) Compute the marginal rate of substitution. (c) Assume w> . Find the optimal bundle (this will be a function of pı and w). Why do we need the assumption w> (d) Sketch the demand function for good...

  • Luke's choice behavior can be represented by the utility function u(x1,x2)= x1 + x2

    Luke's choice behavior can be represented by the utility function u(x1,x2)= x1 +  x2.The prices of x1 and x2 are denoted as p1 and p2, and his income is m. 1. Draw at least three indifference curves and find its slope (i.e. MRS). Is the MRS changing depending on the points of (x1, x2) at which it is evaluated, or constant? 2. Draw a budget constraint assuming that p1 < P2. Find the optimal bundle (x1*,x2*) as a function of income and prices. 3....

  • Suppose Alex’s preferences are represented by u(x1,x2) = x1x32. The marginal utilities for this utility function...

    Suppose Alex’s preferences are represented by u(x1,x2) = x1x32. The marginal utilities for this utility function are MU1 = x23 and MU2 = 3x1x22. (a) Show that Alex’s utility function belongs to a class of functions that are known to be well-behaved and strictly convex. (b) Find the MRS. [Note: find the MRS for the original utility function, not some monotonic transformation of it.] (c) Write down the tangency condition needed to find an optimal consumption bundle for well-behaved preferences....

  • The utility function is u = 3x1 + x2, and the budget constraint is m =...

    The utility function is u = 3x1 + x2, and the budget constraint is m = p1x1 + p2x2. a) What are the demand functions x1(m,p1,p2) and x1(m,p1,p2)? For m=100, p1=4 and p2=1, what are the consumption amounts x1 and x2? b) Assume only p1 changes to p1’=2, define the new consumption values as x1M and x2M. c) Define as uH the utility amount you get from consumption bundle in part a. Find the consumption bundle (x1H,x2H) that gives you...

  • Hi, please help me solve b for the ii) part. I mean derive demand function for...

    Hi, please help me solve b for the ii) part. I mean derive demand function for b. 4. (0) For each of the following utility function, derive the marginal utility (MU) of X1, MU of X2, and marginal rate of substitution (MRS), respectively. (a) U (X:, X2) = x, 13 x 2/3 (Cobb-Douglas) (b) U (xs, Xa) = 3 x + 7 x2+ 10 (Perfect substitutes) (C) U (X1, X2) = min{2 X1, 3 xz) (Perfect complements) (ii) For each...

  • 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?

  • Phil’s quasi-linear utility function U (q1q2)= ln q1 + q2. Show that tis marginal rate of...

    Phil’s quasi-linear utility function U (q1q2)= ln q1 + q2. Show that tis marginal rate of substitution (MRS) is the same in all of his indifference curves at given q1.

  • A consumer has preferences represented by the utility function: u(21,12)=x2? Market prices are p1 = 2...

    A consumer has preferences represented by the utility function: u(21,12)=x2? Market prices are p1 = 2 and P2 = 5. The consumer has an income m = 13. Find an expression for the consumer's demand for good 1,21 (P1). 39p1

  • 3. (ICs for Quasi-Linear Preferences) Consider the utility function: u(x, y) = x1/2 + y. a....

    3. (ICs for Quasi-Linear Preferences) Consider the utility function: u(x, y) = x1/2 + y. a. Find the expression for the MRS (= – dy/dx). b. Draw one IC making sure its shape reflects your expression for MRS above. c. Given your expression for MRS, draw another IC above the one you just drew, and comment on how the slopes of the ICs compare at a given level of x (e.g., at x = 1).

  • * * 5. A consumer's preferences are given by the utility function U = x;'°*". The...

    * * 5. A consumer's preferences are given by the utility function U = x;'°*". The price of good 1 is 3 and the price of 2 is 6, while her income is 36. The utility maximising bundle for the consumer is a. X* = 4, x* = 4 b. x1 = 4, x = 3 C. x1 = 2, x = 6 d. x1 = 8, x* = 2 e. None of the above * * N * *...

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