(a) If your utility is represented by u(x; y) = min(x+2y; 2x+y);what do your indi¤erence curves...

(a) If your utility is represented by u(x; y) = min(x+2y; 2x+y);what do your indi¤erence curves look like?

(b) Given your answer in (a), obtain the MRS (marginal rates of sub- stitution).

(c) Suppose the prices of x and y are px = $3 and px = $1 and you have 100 dollars. What would you choose?

(d) If px decreases to $1; what would you choose? (e) Use the Slutsky decomposition to decompose the total price e¤ect into the substitution e¤ect and income e¤ect when px decreases from $3 to $1:

Expert Solution

Rahul Sunny answered 7 months ago

(a) If your utility is represented by u(x; y) = min(x+2y; 2x+y);what do your indi¤erence curves...

(a) If your utility is represented by u(x; y) = min(x+2y; 2x+y);what do your indi¤erence curves look like? (b) Given your answer in (a), obtain the MRS (marginal rates of sub- stitution). (c) Suppose the prices of x and y are px = $3 and px = $1 and you have 100 dollars. What would you choose? (d) If px decreases to $1; what would you choose? (e) Use the Slutsky decomposition to decompose the total price e¤ect into the...

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(a) If your utility is represented by u(x; y) = min(x+2y; 2x+y);what do your indi¤erence curves...

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