1. Clara's utility function is a) Write an equation for Clara's indifference curve that goes through the point (X,Y)=(2,8). b) Suppose that the price of each good is one and that Clara has an income of 11. Write an equation that describes her budget constraint. c) Find an equation the describes Clara's MRS for any given commodity bundle (X,Y). d) Use the equations in parts b) and c) to solve for Clara's optimal bundle( Hint use the fact that at Clara's optimal choice. = MRS) e) Find Clara's demand function for good X (i.e. find X(Px, Py, M).

1. Clara's utility function is a) Write an equation for Clara's indifference curve that goes through the point (X,Y)=(2,8). b) Suppose that the price of each good is one and that Clara has an income of 11. Write an equation that describes her budget constraint. c) Find an equation the describes Clara's MRS for any given commodity bundle (X,Y). d) Use the equations in parts b) and c) to solve for Clara's optimal bundle( Hint use the fact that at Clara's optimal choice. = MRS) e) Find Clara's demand function for good X (i.e. find X(Px, Py, M).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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