PROBLEMS/SITUATIONS: 1. 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 = X2+ Y2 derive the Marshallian demand function for good Y and evaluate the type of good. 2. 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 = X2 Y2 , derive the Hicksian demand function for good Y.
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PROBLEMS/SITUATIONS:
1. Assume you spend your entire income on two goods X & Y with
2. 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 = X2 Y2 , derive the Hicksian demand function for good Y.
NOTE: Type only your answers. Please do not handwritten your answers. Make sure the formulas, answers and solutions are clear and right! Make your equations understandable especially the over signs.
![Question 1
optimum condition
MRS=Px/Py
MRS=MUx/MUy
MUx=d(U)/dX
MUy=d(U)/dY
U=x2+y2
MUx=2X
MUy=2Y
Optimum condition
2X/2Y=Px/Py
X=Y*Px/Py
Budget constraint
M=Px*X+Py*Y
By substituting value
M=Px*Y*Px/Py+Py*Y
Y=M/[P?x/Py+Py]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb47949da-aa15-4c6d-8c2d-107d56610ed9%2F684d8c80-d984-4674-a3c5-17362d001c84%2Fvzetl7b_processed.jpeg&w=3840&q=75)
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