Linda has a chronic illness that requires two medications: Xolophyl (X) and Ysplinti (Y). She needs to take exactly I dose of Ysplinti for every 5 doses of Xolophyl or she will die instantly. As a result, if she has any extra Xolophyls or Ysplintis, she flushes then down the toilet, deriving no joy or sorrow from them whatsoever. So long as she gets the right amount of Ysplinti, she feels better the more Xolophyl she takes. The price of Xolophyl is P, and the price of Ysplinti is Py. Linda's income is $10. a. Write down a utility function that represents Linda's preferences for Xolophyl and Ysplinti. b. Derive Linda's demand function for Ysplinti: Y(P,P,), which depends on the prices of Xolophyl and Ysplinti. c. How does an increase in the price of Xolophyl shift Linda's demand curve for Ysplinti? Provide intuition.
Linda has a chronic illness that requires two medications: Xolophyl (X) and Ysplinti (Y). She needs to take exactly I dose of Ysplinti for every 5 doses of Xolophyl or she will die instantly. As a result, if she has any extra Xolophyls or Ysplintis, she flushes then down the toilet, deriving no joy or sorrow from them whatsoever. So long as she gets the right amount of Ysplinti, she feels better the more Xolophyl she takes. The price of Xolophyl is P, and the price of Ysplinti is Py. Linda's income is $10. a. Write down a utility function that represents Linda's preferences for Xolophyl and Ysplinti. b. Derive Linda's demand function for Ysplinti: Y(P,P,), which depends on the prices of Xolophyl and Ysplinti. c. How does an increase in the price of Xolophyl shift Linda's demand curve for Ysplinti? Provide intuition.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Linda has a chronic illness that requires two medications: Xolophyl (X) and Ysplinti (Y). She
needs to take exactly I dose of Ysplinti for every 5 doses of Xolophyl or she will die instantly.
As a result, if she has any extra Xolophyls or Ysplintis, she flushes then down the toilet, deriving
no joy or sorrow from them whatsoever. So long as she gets the right amount of Ysplinti, she
feels better the more Xolophyl she takes. The price of Xolophyl is P, and the price of Ysplinti is
Py. Linda's income is $10.
a. Write down a utility function that represents Linda's preferences for Xolophyl and
Ysplinti.
b. Derive Linda's demand function for Ysplinti: Y(P,P,), which depends on the prices of
Xolophyl and Ysplinti.
c. How does an increase in the price of Xolophyl shift Linda's demand curve for Ysplinti?
Provide intuition.
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