1Jane consumes two goods, shoes, s, and housing, h. Her income is M and the prices57/317/3of s and h are Ps and Ph, respectively. Jane's utility function is UsFind the following:aMarshallian demand functionsb.Derive the price elasticity for housing. What is the cross price elasticity forhousing? Derive the expenditure-income elasticity for housing (that is, the %change in expenditure on h when there is a 1% change in income)?What about the Cobb-Douglas demand functions explains these elasticities.C.Derive the indirect utility function and expenditure functiond.Using Shephard's Lemma, derive the Hicksian demand functionse.Perform a Slutsky decomposition for housing (that is, what is the total effecton quantity demanded when there is a change in price and also what is theincome and substitution effect).Now assume income is $1,500, the price of shoes is $8 and the price of housing is $125.f.What is the quantity demanded of housing? Now assume the governmentsubsidizes housing by giving Jane $25 for every unit of housing she buys.Using the idea of compensating variation, how much consumer surplus doesshe gain from this policy?

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Jane consumes two goods, shoes, s, and housing, h. Her income is M and the prices = s¾/³h¾/3 of s and h are Ps and Ph, respectively. Jane's utility function is U=S Find the following: a b. Marshallian demand functions Derive the price elasticity for housing. What is the cross price elasticity for housing? Derive the expenditure-income elasticity for housing (that is, the % change in expenditure on h when there is a 1% change in income)? What about the Cobb-Douglas demand functions explains these elasticities.

Jane consumes two goods, shoes, s, and housing, h. Her income is M and the prices = s¾/³h¾/3 of s and h are Ps and Ph, respectively. Jane's utility function is U=S Find the following: a b. Marshallian demand functions Derive the price elasticity for housing. What is the cross price elasticity for housing? Derive the expenditure-income elasticity for housing (that is, the % change in expenditure on h when there is a 1% change in income)? What about the Cobb-Douglas demand functions explains these elasticities.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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