2. Consider the following utility function: u(x, y) = x² + y. (a) Derive the optimal utility maximizing demands for x as a function of prices and income. (b) Find the formula for price elasticity of demand for x. (c) Find the formula for the income elasticity of demand for x.
2. Consider the following utility function: u(x, y) = x² + y. (a) Derive the optimal utility maximizing demands for x as a function of prices and income. (b) Find the formula for price elasticity of demand for x. (c) Find the formula for the income elasticity of demand for x.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter6: Consumer Choices
Section: Chapter Questions
Problem 15CTQ: Income Effects depend on the income elasticity of demand for each good limit you buy. If one of the...
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![2. Consider the following utility function: u(x,y) = xỉ + yž.
(a) Derive the optimal utility maximizing demands for x as a function of prices and
income.
(b) Find the formula for price elasticity of demand for x.
(c) Find the formula for the income elasticity of demand for x.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7ab2fcdd-e673-450e-8879-48d7de8ef6bd%2F66c850dd-b556-4825-8b14-97901e5142fb%2Feomrzvt_processed.jpeg&w=3840&q=75)
Transcribed Image Text:2. Consider the following utility function: u(x,y) = xỉ + yž.
(a) Derive the optimal utility maximizing demands for x as a function of prices and
income.
(b) Find the formula for price elasticity of demand for x.
(c) Find the formula for the income elasticity of demand for x.
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