please only do: if you can teach explain steps of how to solve each part use lengrange A consumer has preferences for two goods that are represented by the utility function u(x₁, x₂) =2√₁ + √√₂ if x₁ ≤. For 2₁ > T, he gets no additional benefit from consuming more ofgood 1; that is, if #₁ > then he is indifferent between (21, 2) and (T, T2).(a) Show that this consumer's preferences are monotone and convex.Solution: If a' »r, then 2√√₁+√√√₂ > 2√₁ + √₂ since √ is strictly increasing.This implies that preferences are monotone for 1 ≤. For ₁>, once can replace x₁with T.For convexity, note that, for x₁ ≤, indifference curves consist of solutions to 2√√₁ +√₂ = k for some k. Along the indifference curve, for x₁ < we have d>0dxand for ₁> we have 2 = 0. Since preferences are continuous and monotone, itdzfollows that they are (weakly) convex.(b) Find the consumer's Hicksian demands for each good.Solution: Solving the expenditure minimization problem givesx1 =2up2P1+ 4p2,h(p, u) =2((| (T, (u - 2 √T) ²)and2up2P₁+4P2x₂ =up1P1+ 4p2,provided that ₁ ≤, i.e. provided that u ≤ (2+p₁/2p₂) √ (note that part (a) impliesthat the solution to the FOCs is indeed a minimum). Otherwise, the solution is x₁ = Tand x2 = (u - 2√7)². Putting these together, we have22+)², (P²) ²) if u ≤ (2 + p₁/2²p2)√E,P1+4P2otherwise.=

Utility function : U = 2(x1)0.5 + x20.5 Price of good 1 : P1 , Price of good 2 : P2 Monotonic…

Answered: A consumer has preferences for two…

Business

Economics

A consumer has preferences for two goods that are represented by the utility function u(x1, x₂) =

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Q6 Homework Answered Due Sep 7th, 11:59 PM . After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision is still months away and you may reverse this decision. Which of the following events could prompt you to reverse this decision? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. The marginal benefit of going to Spain increases. b The marginal cost of going to Spain increases. The marginal benefit of going to Ireland increases. The marginal cost of going to Ireland decreases. X Your answer
get solution
Why is it important to use Cash Flows in Economic Analysis?
C Get Homework Help With Chegg X Content O bblearn.uca.edu/ultra/courses/_130806_1/cl/outline?legacyUrl=-2Fwebapps-2Fcalendar-2Flaunch-2Fattempt-2F_blackboard.platform.gradeb. e ☆ E Apps I mylJCA M khapper2cubuc. H O Alpha Sigma Alpha. É iClaud O Pinterest b View My Activity I Olher bokmarks Micrasoft Office Ho. Blarkb:ard ECON 2320-TBA 0000-PRINCIPLES OF MACROECONOMICS - 31353.202220 Smartwork5: Ch. 11: Homework * SUBMIT ANSWER 15 OF 17 QUESTIONS COMPLETED 2:52 PM P Type here to search 20% O 69"F Mostly cloudy 描 3/6/2022
Oscar purchased a $30 steak for dinner, but burned it bad on the grill. Since he paid top dollar for the steak he figures he should eat it anyways. Is Oscar properly using economic reasoning? Yes, the marginal cost of not eating the steak would be $30. No, the $30 spent on the steak is a sunk cost and should not be included in his decision whether to eat the steak or not.. Yes, if he doesn't eat the steak he will have wasted economic resources. No, the opportunity of eating the steak is whatever else he could have purchased for the $30.
4