Question
In: Economics
Suppose Mike’s utility function is u(x,y)=2lnx +lny. 1. Derive the demand functions. 2. Is y a...
Suppose Mike’s utility function is u(x,y)=2lnx +lny.
1. Derive the demand functions.
2. Is y a Normal good?
3. Is x an ordinary good?
4. Assume the price of x is initially 1 dollar, and the price of y is also 1 dollar. Given that income is 9, if the price of x doubles to 2 dollars, decompose the change in consumption of x into substitution effect and income effect. Illustrate your answer with a graph.
5. Now, given the price increase in part 4, compute the Compensating variation (CV) and the Equivalent Variation (EV).
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
1. Suppose Mike’s utility function is u(x,y)=2lnx +lny. a. Derive the demand functions. b. Is y...
1. Suppose Mike’s utility function is u(x,y)=2lnx +lny.
a. Derive the demand functions.
b. Is y a Normal good?
c. Is x an ordinary good?
d. Assume the price of x is initially 1 dollar, and the price of
y is also 1 dollar. Given that income is 9, if the price of x
doubles to 2 dollars, decompose the change in consumption of x into
substitution effect and income effect. Illustrate your answer with
a graph.
e. Now, given...
Consider the utility function of U(X,Y) = X0.2Y0.4 Derive the Marshallian demand curve for X Derive...
Consider the utility function of U(X,Y) =
X0.2Y0.4
Derive the Marshallian demand curve for X
Derive the Hicksan demand curve for X
What is the own-price elasticity for X?
What is the income elasticity of X?
What is the price elasticity of X with respect to y
(Py)
If the income level is 120, then what is the Pxthat
maximizes total spending
Show that Slutsky equation holds
Show that
ex,px+ex,py+ex,I=0. What
does it mean?
Show that Engle Aggregation holds. What does it...
Write the demand functions for the following utility function: U = ln(x) + ln(y)
Write the demand functions for the following utility function: U
= ln(x) + ln(y)
Given the utility function U ( X , Y ) = X 1 3 Y 2...
Given the utility function U ( X , Y ) = X 1 3 Y 2 3, find the
absolute value of the MRS when X=10 and Y=24.
Round your answer to 4 decimal places.
Suppose that the utility function of a consumer is U(x,y) = x ¼y ¾, where x...
Suppose that the utility function of a consumer is U(x,y) = x
¼y ¾, where x and y are the quantities of the
good X and good Y consumed, respectively. The consumer's income is
400.
(a) What is the demanded bundle when the price of good X is 10
and the price of good Y is 10?
(b) Redo part (a) when the price of good X is doubled?
(c) Redo part (a) when the price of good Y is...
Suppose a consumer's utility function is given by U ( X , Y ) = X...
Suppose a consumer's utility function is given by U ( X , Y ) =
X 1 2 Y 1 2. The price of X is PX=8 and the price of Y
is PY=5. The consumer has M=80 to spend.
You may find that it helps to draw a graph to organize the
information in this question. You may draw in the blank area on the
front page of the assignment, but this graph will not be
graded.
a) (2...
"Suppose a consumer has preferences represented by the utility function U(X,Y) = X(^2)Y Suppose Py =...
"Suppose a consumer has preferences represented by the utility
function U(X,Y) = X(^2)Y Suppose Py = 1, and the consumer has $360
to spend. Draw the Price-Consumption Curve for this consumer for
income values Px =1, Px = 2, and Px = 5. Your graph should
accurately draw the budget constraints for each income level and
specifically label the bundles that the consumer chooses for each
income level. Also for each bundle that the consumer chooses, draw
the indifference curve...
Jim’s utility function is U(x, y) = xy. Jerry’s utility function is U(x, y) = 1,000xy...
Jim’s utility function is U(x, y) = xy. Jerry’s utility function
is U(x, y) = 1,000xy + 2,000. Tammy’s utility function is U(x, y) =
xy(1 - xy). Oral’s utility function is -1/(10 + xy. Billy’s utility
function is U(x, y) = x/y. Pat’s utility function is U(x, y) =
-xy.
a. No two of these people have the same preferences.
b. They all have the same preferences except for Billy.
c. Jim, Jerry, and Pat all have the same...
Suppose an individual has the following utility function: U(x, y) = −4(x − 5.5)^2 − 2(y...
Suppose an individual has the following utility function: U(x,
y) = −4(x − 5.5)^2 − 2(y − 3.5)^2 Further assume that the price of
good x, px = $6, the price of good y, py = $8, and the individual
has an income m = $65
a) Draw an indifference curve (one IC is enough) that represents
this person’s preferences. Please label the graph properly
including values for x and y.
b) Intuitively, and without formally solving, can you guess...
Suppose an individual has the following utility function: U(x, y) = −4(x − 5.5)^2 − 2(y...
Suppose an individual has the following utility function: U(x,
y) = −4(x − 5.5)^2 − 2(y − 3.5)^2
Further assume that the price of good x, px = $6, the price of
good y, py = $8, and the individual has an income m = $65
a) Draw an indifference curve (one IC is enough) that represents
this person’s preferences. Please label the graph properly
including values for x and y.
b) Intuitively, and without formally solving, can you guess...
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