Suppose an individual has preferences over goods x and y, and their expenditure minimization problem has thefollowing expenditure function: E(px, Py, U) = (px + 3p,)U.What is the person's Hicksian demand?O(h, hy) = (2p U, pU)O(h, hy) = (U, 3U)O(h, hy) = (Up,',Up,)O(hx, hy) = (3U, U)What is the individual's indirect utility?OV =3p! pOV =P.+3p,OV =P PyOV =P.P

The change in price of a good leads to change in quantity demanded of the good. This change in…

Answered: Suppose an individual has preferences…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the following Marshallian Demand Function derived from the utility maximization problem, X = a M P where X is the quantity consumed, Mis income of the consumer, P is the price of the good, and α is some number between 0 and 1 which represents the relative importance of the good. Does this demand function satisfy the law of demand? (_ Why or why not? (*
A consumer has preferences on Amazon original shows (x), and the composite good (y) described as u(x,y) = x2y (HINT: MUx = 2xy and MUy = x2) and she has I = $300 budget in total. Assume pY = $1, so we can think of y as the saved dollars in her pocket for other uses. Now, if she is not an amazon prime member, each show costs pX = $10, but if she is a prime member, then pX = $4. Amazon prime membership costs $120. (a) Draw her feasible budget set on the x-y axis for the no-prime-membership case, and the prime-membership case, separately. (b) If she chooses not to be a prime member, what is her optimal bundle (x,y) ?(c) If she chooses to become a prime member, what is her optimal bundle (x,y) ?(d) What is her optimal utility in (b)?in (c)? Would she want to become a prime member?
Suppose that i's preferences over goods x and y are represented by the following utility function U₁(x, y)=x45¹5. Let m denote the consumer's income, p denote the price of good x and let the price of good y equal 1. A) Find the Marshallian demand functions for goods x and y. B) Show how each of the demand function is affected by a change in the price of good x. C) Which of the goods is an inferior good?
Suppose that we can represent Joyce's preferences for cans of pop (the x-good) and pizza slices (y-good) with the utility function min[4x,5y]. a) Find her Marshallian Demand Functions. b) Find her Hicksian Demand Functions
Which of the following utility functions represents preferences over consumption bundles (X, Y) that violate the assumption of diminishing MRS? (a) U(X,Y) = 3 ln(X) + 5 ln(Y) (b) U(X,Y) = X² + y² (c) U(X, Y) = XY (d) U(X,Y) = X² + Y² (e) U(X, Y) = X¹Y³
Let a consumer's utility function be U (x, y) = x'/²y/2. The consumer's income is I = 160 and prices for the two goods are, respectively, p, = 1 and py = 4. (a) Write down the utility maximization problem and compute the optimal consumption basket. (b) Suppose now the price of good y is equal to p, = 16 (while the price of good r stays constant). Compute the new optimal consumption basket.
Please no written by hand solutions
(b) U(x, y) = min [ax, y]
Please don't use Ai solution
Suppose you have the following indirect utility function: V(Pa, Py, I) = In PxPy What are marshallian demands for x and y? I (a) (9x9y) = (22) (b) (9,9y) = (In, In 2) (c) (9, 9y) = (exp(2p/py), exp(2ppy)) I (d) (9x, gy) = (2pr+py' px+2py) What is the expenditure function for the associated expenditure minimization problem? (a) E(pa, Py, U) = (P + Py) ln(U) (b) E(pa, Py, U) = √exp(U)Papy (c) E(pa, Py, U)= (p²+p²) In(U) (d) E(pa, Py, U) = exp(U)²papy What are the individual's Hicksian demands for goods x and y? (a) (h₂, hy) = ((BU)¹/², (PU) ¹/²) (b) (ha, hy) = (RU, DU) (c) (ha, hy) = ((2 exp(U))¹/², (exp(U))¹/²) -1/2 (d) (hx, hy) = ((P₂PzU)−¹/², (P₂PzU)-¹/2) Are x and y complements or substitutes?
A consumer has a utility function given by lnU =5linx subscrip1 +3lnx subscript 2 if the budget constraint is given by 10x subscript 1 +14x subscript 2 =124 find the optimal quantity of the two commodities
Derive Ryan's demand function for q₁, given his utility function is where o = = (9₁) P + (9₂)P, 1 1-p The demand curve for q₁ as a function of P₁, P2, and Y is (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a subscript can be created with the_ 9₁ = character.) U= Let the price of q₁ be p₁, let the price of q2 be p2, and let income be Y.

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