QUESTION 1 The consumer's utility function is the following: U=xx, 1 2 The consumer's optimal values of x, and x are the given by the following: x of x2 1 X 1 2 2P 2 1 The compensated demand equations for x, is the following: x =L 1 lc 2 2P,P "vial" I 1/2 1 1 2P 2 Assume the prices are the following: P =12, P =10, and /=1000. The price of x changes to P', =15. 1 2 1 1 What is the substitution effect?
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- If the supply and demand functions for a commodity are 100 + 2(4+ Pa = - (Q.) P₁ = (Q + 2)² E plot each function on the same graph Estimate the quarum price and quarty aigebraicaty and graphicaly w▪▪▪▪▪▪▪▪▪▪▪▪▪▪▪▪▪▪ ‒‒‒‒‒‒‒‒‒‒‒‒wwwwwwwwwIncome Effects depend on the income elasticity of demand for each good limit you buy. If one of the goods you buy has a negative income elasticity, that is, it is an inferior good, what must be true of the income elasticity of the other good you buy?What does a downward-sloping demand curve mean about how buyers in a market will react to a higher price?
- If a 10 decrease in the price of one product that you buy causes an 8 increase in quantity demanded of that product, will another 10 decrease in the price cause another 3 increase (no more and no less) in quantity demanded?If a good is inferior and the price increases, then the income effect will be O negative O ambiguous O positive zero3 4 The demand x is the number of items that can be sold at a price of $p. For x= p* - 3p° + 1500, find the rate of change of p with respect to x by differentiating implicitly. ..... The rate of change of the price p with respect to the demand x is
- Suppose an indinidual has the following utility finction Urey)-2+2" writh a strictly ineveaseng morrginal rate of substitntion. and income of 3 The price of y is $4 CPpi ) The intial price of x is $lcre=) and then increases to 3 px=3). Find the chonge in the quantidy consumed of X.IHow much of the chonge is the income effect? How much by the Substitution effect? Evplan in Econ terms erplainedl byWhich of the following equations correctly represents solving Q = 140 - 4P for P? O P 35-4Q O P = 140 - Q OP 140 - 4Q OP=35-1Q O P = 140+ Q Plot the relationship between P and Q on the following graph. Note: Price (P) is on the vertical axis and quantity (Q) is on the horizontal axis. PRICE 40 35 30 25 20 15 л 10 ?2. Complete the demand schedule below for the given equation Qd 750 -10P at given prices P12.00, PI5.00, P18.00, P21.00, and P24.00. Price (x) In Php Quantity Demanded ty) 12.00 15.00 18.00 21.00 24.00 Required: a. Complete the table b. Plot the schedule on a graph c. Determine the alope d. Interpret the slope e. Answer the following questions: 1. What is the maximum amount people would want product? 2. If the price rises to P30.00 from an original price o P24.00, what would be the change in the quantity demanded by consumers? 3. IE the quantity demanded of the product changed by 60 units, how much was the change in price? 4. If the price is expected to increase by P25.00, what would be the expected impact to the quantity demanded of the product? eant for this
- Problem 6 Consider the following diagram that shows the effects of a decrease in the price of beer on a consumer's choice of consumption of beer and pretzels: Ber 19 17 ICI Pretzds a.) What is the value of the income effect on beer consumption of the price change? b.) Are beer and pretzels complements or substitutes?fonsumer's demand xy for two different and the consumer's in come is $72. different Consumer's demand xy for chosen to maximize two the శ్రిందికి goods are x² lefility function The per respectively unit of , and the Consumer's in come is $7 x and y are $3and $4. 22,2 © telrite out the fagrangean for the Constrained maximization problem © Find the utility maximizing demands for both goods and he Larange multiplier, 2 o What is the change in consumer's ufility if income Changes from $72 to $75i FS 16 1/2 Problem 1 The demand for good x is given by 100% 10 Research shows that the prices of related goods are given by Py56,500 and P2 $100, while the average income of individuals consuming this product is M-$70,000. a. Indicate whether goods Y and Z are substitutes or complements for good X, b. Is X an inferior or a n a normal good? How many units of good X will be purchased when Px-55,230? d. Determine the demand function and inverse demand function for good X. Graph the demand curve for good X. F6 EC650 Managerial Economics Module 2 Homework Problem 2 Use the accompanying graph to answer these questions. A 0=6,000- a. Suppose demand is D and supply is S. If a price ceiling of $6 is imposed, what are the resulting shortage and full economic price? b. Suppose demand is D and supply is S. If a price support of $12 is imposed, what is the resulting surplus? What is the cost to the government of purchasing any and all unsold units? c. Suppose demand is D and supply is Sº so that…