Draw the compensated (hicksian) and uncompensated (marshallian) demand curves when: a) both normal goods when price of good 1 increases b) both normal goods when price of good 1 decreases c) both inferior goods when price of good 1 increases d) both inferior goods when price of good 1 decreases e) one normal good, another inferior good when price of inferior good (good 1) increases f) one normal good, another inferior good when price of inferior good (good 1) decreases

Draw the compensated (hicksian) and uncompensated (marshallian) demand curves when: a) both normal goods when price of good 1 increases b) both normal goods when price of good 1 decreases c) both inferior goods when price of good 1 increases d) both inferior goods when price of good 1 decreases e) one normal good, another inferior good when price of inferior good (good 1) increases f) one normal good, another inferior good when price of inferior good (good 1) decreases

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter5: Income And Substitution Effects

Section: Chapter Questions

Problem 5.5P

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Assume you spend your entire income on two goods X & Y with prices given as Px & Py, respectively. Prices and income (I) are exogenous and positive. Given that U = X + Y, derive the Marshallian demand function for good Y and evaluate the type of good. Assume you spend your entire income on two goods X & Ywith prices given as Px & Py, respectively. Prices and income (I) are exogenous and positive. Given that U= X²Y², derive the Hicksian demand function for good Y. Suppose that initially Px = 2, P = 8, I = 96 and the Marshallian demand function for good Y is given by . Calculate the own price & income elasticities of demand for good Y. Interpret your computed values and say something about the type of good.
Draw the compensated (hicksian) and uncompensated (marshallian) demand curves when: a) both normal goods when price of good 1 increases b) both normal goods when price of good 1 decreases c) both inferior goods when price of good 1 increases d) both inferior goods when price of good 1 decreases e) one normal good, another inferior good when price of inferior good (good 1) increases f) one normal good, another inferior good when price of inferior good (good 1) decreases Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
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