Consumer preference is give by u(X1, X2) = max{α1X1, α2X2} • Plot indifference curves • Derive...

Consumer preference is give by u(X₁, X₂) = max{α₁X₁, α₂X₂}

• Plot indifference curves
• Derive demand functions
• Derive the expenditure function

Expert Solution

^ we get such an EITHER-OR kind of optimal choice because utility function is CONCAVE in this case

Rahul Sunny answered 1 year ago

1. Assume a consumer has as preference relation represented by u(x1; x2) = x1a + x2...

1. Assume a consumer has as preference relation represented by u(x1; x2) = x1a + x2 for a E (0,1); with x E C = R2+: Answer the following: a. Show the preference relation this consumer is convex and strictly monotonic. b. Compute the MRS between good 1 and good 2, and explain why it coincides with the slope of an indifference curve. c. Write down the consumer optimization problem, and construct the first order conditions for this problem. d....

If the consumer preference on (x1, x2) can be represented as the following utility function: U...

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Pat’s preference is given by u(x1, x2) = min {x1, x2}. Currently, prices are p = (p1, p2) and Pat’s income is I. Is he better off if the price of good one is halved so that p = (p1/2 ,p2), or if his income is doubled to 2I?

Amy has utility function u (x1, x2) = min { 2(x1)^2x2, x1*(x2)^2 }. Derive Amy's demand...

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Your preference is represented by the utility function: u(x1, x2) = x10.5x20.5 where x1 is potato...

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Assume a consumer has the utility function U (x1 , x2 ) = ln x1 +...

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Suppose that a consumer has a utility function U(x1,x2) = x1 ^0.5 x2^0.5 . Initial prices...

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Suppose a consumer seeks to maximize the utility function U (x1; x2) = (-1/x1)-(1/x2) ; subject...

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Consider a consumer with utility function U(x) =2√x1+x2. Draw her two Engel curves. Find the Demand...

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