1- 1. (a) Write down the demand function of x, and the demand function of x2. Hint: you can use the same method in the previous homework to find the utility - maximized x₂ ( or x₂) as a function of m, p₁, P₂. (b) Suppose that m = 10, write down the inverse demand function of x, and draw the demand curve. (see Ch. 6.8, Varian) (c) Now, the consumer's utility becomes u(x, y) = min{x₁,x₂}. Write down the demand function of X₁ and the demand function of x₂. (d) Now, the consumer's utility becomes u(x, y) = x₁ + x₂. Write down the demand function of x, and the demand function of x₂.2.-) Show that Cobb - Douglas preferences u = x₁x₂are homothetic preferences. A consumer has m dollars. The price of x1 is pi dollars, and the price ofx2 is p2 dollars. The consumer(a) Write down the demand function of x1 and the demand function of x2. Hint: you can use the same method in the previous homework to find the utility - maximized x1 (or x2) as a function of m, P1, P2. (b) () Suppose that m 10, writedown the inverse demand function of x, and draw the demand curve. ( seeCh. 6.8, Varian) (c) Now, the consumer's utilitybecomes u(x, y) = min{x1, x2}. Writedown the demand function of x1 and the demand function of x2. (d)) Now, the consumer's utilitybecomes u(x, y) = x1 + X2. Writedown the demand function of x1 =
1- 1. (a) Write down the demand function of x, and the demand function of x2. Hint: you can use the same method in the previous homework to find the utility - maximized x₂ ( or x₂) as a function of m, p₁, P₂. (b) Suppose that m = 10, write down the inverse demand function of x, and draw the demand curve. (see Ch. 6.8, Varian) (c) Now, the consumer's utility becomes u(x, y) = min{x₁,x₂}. Write down the demand function of X₁ and the demand function of x₂. (d) Now, the consumer's utility becomes u(x, y) = x₁ + x₂. Write down the demand function of x, and the demand function of x₂.2.-) Show that Cobb - Douglas preferences u = x₁x₂are homothetic preferences. A consumer has m dollars. The price of x1 is pi dollars, and the price ofx2 is p2 dollars. The consumer(a) Write down the demand function of x1 and the demand function of x2. Hint: you can use the same method in the previous homework to find the utility - maximized x1 (or x2) as a function of m, P1, P2. (b) () Suppose that m 10, writedown the inverse demand function of x, and draw the demand curve. ( seeCh. 6.8, Varian) (c) Now, the consumer's utilitybecomes u(x, y) = min{x1, x2}. Writedown the demand function of x1 and the demand function of x2. (d)) Now, the consumer's utilitybecomes u(x, y) = x1 + X2. Writedown the demand function of x1 =
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Only typed solution
Transcribed Image Text:1. (a) Write down the demand function of x and the demand function of x₂. Hint: you
can use the same method in the previous homework to find the utility - maximized x, (
or x₂) as a function of m, p₁, P₂. (b) Suppose that m = 10, write down the inverse
demand function of x and draw the demand curve. (see Ch. 6.8, Varian) (c) Now, the
consumer's utility becomes u(x, y) = min{x₁, x₂}. Write down the demand function of
X₁
and the demand function of x₂. (d) Now, the consumer's utility becomes
1
a 1-a
1 2
u(x, y) = x₁ + x₂. Write down the demand function of x, and the demand function of
x₂. 2.-) Show that Cobb - Douglas preferences u = x₁x₂ are homothetic
preferences. A consumer has m dollars. The price of x1 is pi dollars, and the price ofx2
is p2 dollars. The consumer(a) Write down the demand function of x1 and the demand
function of x2. Hint: you can use the same method in the previous homework to find
the utility - maximized x1 (or x2) as a function of m, P1, P2. (b) () Suppose that m
10, writedown the inverse demand function of x, and draw the demand curve. (
seeCh. 6.8, Varian) (c) Now, the consumer's utilitybecomes u(x, y) = min{x1, x2}.
Writedown the demand function of x1 and the demand function of x2. (d)) Now, the
consumer's utilitybecomes u(x, y) = x1 + X2. Writedown the demand function of x1
=
and
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 6 steps with 22 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education