CLASSWORK 4For the Utility function and demand functions:U(x, y) = x0.5 + y0.5Ix(px. Py, 1) =y (Px₂ Py, 1) =Px(1 +PxPy¹)IPx (1 + px ¹py)1. Calculate the elasticities of the Marshallian demand functionfor good 1.2. Demonstrate the following:a. Homogeneity in terms of the Marshallian demand elasticitiesb. Engel aggregationc. Cournot aggregation3. Calculate the compensated price elasticityANSWER 2 AND 3 ONLY

Given: U(x,y) = x0.5y0.5 x(px,py,I)=Ipx(1+pxpy-1) y(px,py,I)=Ipx(1+px-1py)

Answered: For the Utility function and demand…

For the Utility function and demand functions: U(x, y) = x0.5 + y0.5 I Px(1 + PxPy¹ x(Px, Py, 1) = = y (px, py, 1) = Px(1 + px¹Py) 11' CUL

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Let qA be the quantity of apples and go the quantity of oranges. A consumer's utility is described…

A: Consumer utility refers to the satisfaction or happiness that a consumer usually derives from the…

Q: The law of diminishing marginal utility states that.. price must be lowered to induce firms to…

A: Utility refers to the satisfaction derived from the consumption of good. The marginal utility shows…

Q: Ayana is pitching an idea for a startup company that makes and sells solar-powered phonechargers…

A: ***Since the student has posted a question with multiple subparts, so the expert is required to…

Q: = = 1. Two consumers have utility functions given by UA x¹/3y2/3 and UB x¹/3 + y²/³. If each…

A: We know that a consumer usually maximizes utility when: MRS = Price Ratio which means the Marginal…

Q: Consider a consumer with the utility function U (x, y) = x" y where x is the quantity of good X and…

A: Optimal consumption bundle is where MUx / MUy = Px / Py Where MUx = Marginal utility from good x MUy…

Q: Select the function that represents the marginal utility of X for the utility function: U = X³Y².

A: Marginal utility ,it may be defined as the satisfaction that is derived from the consumption of an…

Q: Is the utility function u = min{3x, 2y + 1} a monotonic transfor- mation of u = min {3x, 2y}? True…

A: A monotonic transformation of a utility function is a transformation that preserves the order of…

Q: c) The consumers utility function is given by U(X,Y)= 5X + 3Y and the given bundle is X = 6 and Y =…

A: Given:The consumer's utility function is U(X,Y)=5X+3Y. The given bundle is X=6 and Y=10.To…

Q: Consider the utility function u(x, y) = x1/2y1/2. How do the marginal utilities change as x…

A: Ans. Utility function u(x, y) = x1/2y1/2Take the partial derivative of the utility function w.r.t.…

Q: Consumer satisfaction from consuming goods X and Y is as follows: U=10X+14Y-X2-Y2 and consumer…

A: Consumer equilibrium is the situation where he gets maximum satisfaction level of utility with given…

Q: alculate the marginal rate of substitution (MRS12) for the following utility function: U(q1,q2)=…

A: Marginal rate of substitution refers to the slope of an indifference curve. It is calculated as the…

Q: 2. Cynthia has preferences represented by the utility function u(x) = x² + x2 (a) Calculate…

A: A utility function is a mathematical representation of a consumer's preferences over different…

Q: Consider the following utility functions. G(x,y) = x² + 3y² H(x,y) = (x+1)¹/2 + y + 1 L(x,y) = x ey…

A: The function for which the MRS decreases as good x increases, have strictly convex preference.

Q: Only typed solution

A: U(x, y) = (x^a * y^(1-a))^b + y= x^(ab) * y^(b - ab) + y= x^(ab) * y^(1 - ab) + y= x^(ab) * [y^(1 -…

Q: The utility function of a consumer is given as follows. U(x, y) = x?y3. MU, = 2xy3 and MU, 3x?y2.…

A: It tells the inverse relation between quantity and price of the commodity.

Q: Show whether or not the following utility functions are monotonic transformation of each other u =…

A: Hello. Since your question has multiple parts, we will solve first question for you. If you want…

Q: Do the preferences represented by this utility function satisfy monotonicity? Why or not? D. why

A: A function is monotonic if it is increasing throughout without any change or decreasing throughout.…

Q: A consumer's utility function is -a u = x1x², where ₁ and 2 are the quantities consumed of goods one…

A: The total level of satisfaction that an individual derives from the consumption of good is referred…

Q: 1. Consider a consumer with the utility function u(x, y) = 2x¹/2 + y, an income of I = Rs100, and…

A: A utility function is a concept in economics that represents an individual's preferences or…

Q: der a consumer with the utility function Ur.v) = xy where x is the quantity of good X and y is the…

Q: Ayana is pitching an idea for a startup company that makes and sells solar-powered phonechargers…

A: Let us understand this, with associating values in the equation, Let the income (I) be 1000; Let PC…

Concept explainers

Form Utility

The term utility in general refers to the satisfaction earned from usage of a particular product or service. Utility always plays an important role because it influences various important elements like demand & thereby the price of the good or service as well. Though utility is not easy to measure, various types of economic models can be used indirectly. There can be various types of utilities like economic utility, marginal utility, cardinal utility, form utility.

Question

100%

CLASSWORK 4
For the Utility function and demand functions:
U(x, y) = x0.5 + y0.5
I
x(px. Py, 1) =
y (Px₂ Py, 1) =
Px(1 +PxPy¹)
I
Px (1 + px ¹py)
1. Calculate the elasticities of the Marshallian demand function
for good 1.
2. Demonstrate the following:
a. Homogeneity in terms of the Marshallian demand elasticities
b. Engel aggregation
c. Cournot aggregation
3. Calculate the compensated price elasticity
ANSWER 2 AND 3 ONLY

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1x

Step 2

Step 3

Step 4

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

which answer is correct among the provided ones the answer i got is provided on the image which is incorrect
1. Jan has the following utility function for broccoli: U(B) = 54B - 0.5B³ a) What is Jan's marginal utility function?
A consumer’s preferences over two goods x and y are given bythe utility function U(x, y) = xαyβ with α, β > 0. The prices of the goods are px = 2 and py = 4.The consumer has an income of I > 0.(a) For what values of α and β are these utility functions strictly monotone?(b) For what values of α and β will the consumer demand (i.e., Walrasian demand) be more x than y?(c) For what values of α and β are these goods gross substitutes? For what values of α and β are these goods gross complements? Provide a justification for your answer.
solutions. Question 1 Calculating MRS for CD Utility Functions (a) If a consumer has a CD utility function 0.4 0.6 U(91,92) = 994926, calculate MRS1,2. (b) If a consumer has a CD utility function Ima kdown1 calculate MRS1,2. (c) If a consumer has an utility function noltan asd Tor sympy ,1-α U(91,92) = 91 92 llib et (.) orde (hing aid tol bholup U(91,92) = a ln(91) + (1 - a) ln(92), diw sonuanos of calculate MRS1,2. Is it the same as the result in the previous part? (Note: Recall that we discussed the concept of ordinal utility in class, which means only the order of utility matters, not its magnitude. In function is a monotone transformation on the CD utility function. Notice that In (qq) = a ln(9₁) + (1 - a) ln(92). This example verifies that a monotone transformation does not change *(S) sidshav the consumer's indifference curves.) wobei/ (d)
Help!
A student has a lunch utility function U(S, P) 8S + 3P, where S is number of salads per month and P is number of pizzas per month. The price of a salad is $5, the price of a pizza is 8, and his monthly income for lunch is $80. a) Derive the equation representing the consumer's demand for Salad. Represent the demand for Salad graphically. b) The price of Salad goes up to $25 and the price of Pizza does not change. Compute and represent graphically the new equilibrium of the student. What can you tell about the substitution effect on Salad and pizza
Help me
A B C
A consumer has utility (see image) on ice creams (x) and cakes (y). (a) Are the indifference curves bowed towards the origin? (b) Derive his demand function (as a function of prices px, py and budget I) for ice cream (x). (c)(Looking at the demand function you found in (b), Is ice cream a normal good? Are ice cream and cakes substitutes or complements? Calculate the income elasticity of market demand at the point px = 2, py = 1 and I = 12.