Assignment 1.pdfQuestion 1The compensated (Hicksian) demand curve is always steeper than the uncompensated(Marshallian) demand curve. True or False and Explain your answerQuestion 2Kofi's utility function is given by U«(X,Y) = XY . The utility functions of his four friends - Esi(UE) John (U,), George (Uc) and Osei (Uo) are:a. UE(X,Y) = 100XYb. U,(х,Y) — -XҮc. Uc(X,Y)= XY – 10,000d. Uo (X, Y) — х —Ү-Which of these friends have the same preference as Kofi.Question 3A consumer spends her income M on two goods (X1 and X2) and the prices of these goods are P1andP2. If the Marshallian demand for X2 is:P1X2P2a. Find her Marshallian demand for X,b. What is the slope of the Hicksian or Compensated demand for good 1 (X,)c. Is good 1 a substitute or complement to good 2d. Is good 2 a substitute or complement to good 1e. Is X1 a normal goodf. Is X, a Giffen goodQuestion 4There are two goods, apple and banana, whose quantities are denoted by X and Y and prices by Pxand P, respectively. There is a consumer whose income is denoted by M and utility by U. Hisexpenditure function is known to be:M = M(P,, Py, U) = P,P,Ua. Find the consumer's Hicksian (compensated) and Marshallian (uncompensated) demandfunctions.b. If M = 100, Pxwhat is his resulting utility= 1 and P = 1, what quantities of X and Y does the consumer buy, and

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Answered: demand curve

demand curve

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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