In: Economics

consider a representative consumer with the utility function ?(?, ?) = ?? + ? and the...

consider a representative consumer with the utility function ?(?, ?) = ?? + ? and the budget constraint ??? + ??? ≤ ?. Assume throughout that all prices and quantities are positive and infinitely divisible.

Assume initially that ?? = ?? = 1 and ? = 10.  Derive the consumers equilibrium cross-price elasticity between goods ? and ? and evaluate the value of this elasticity at the initial parameter values given .

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Consider a representative consumer with the utility function ?(?, ?) = ?? + ? and the...
Consider a representative consumer with the utility function ?(?, ?) = ?? + ? and the budget constraint ??? + ??? ≤ ?. Assume throughout that all prices and quantities are positive and infinitely divisible. Find the equation of an arbitrary indifference curve for this utility function (evaluated at ̅ utility level ?). Sketch of graph of this indifference curve (be sure to justify its shape and to derive/demark any points of intersection with the axes).
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