Show that the two utility functions given below generate identical demand functions for goods X and YUCXY) log(X)+log(YC) UCxY) (XY05The demand function for good X and the demand function for good Y for both utility functions equalO A.X=and YPvPxО В.Х-and Y2PvОс.X Y=21PXPYO D.Х-and Y2P.2PyОЕ.X= Y=РХPY

Two utility functions are given which are:

Answered: Show that the two utility functions…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Now suppose that income goes up to 15oo. Illustrate how the budget constraint will change. If both goods are normal, explain where the new equilibrium will be (your answer might consist of a region of bundles, rather than just one bundle).
Which of the following correctly defines compensating variation? O The difference in the price a consumer is willing to pay and the price the consumer actually pays. The amount of income that a consumer requires to compensate them for a lower quality product. O The amount of income that must be given or taken away from a consumer to keep their purchasing power constant after a price change. O The amount of income that must be given or taken away from a consumer after a change in price, such that their welfare after the price change is the same as it was before the price change. O The amount of income that must be given or taken away from a consumer before a change in price, such that their welfare before the price change is the same as it will be after the price change. O No answer.
A very large substitution effect of a price change (relative to the magnitude of the income effect) implies a relatively flat demand curve. O True O False
If the MRS is an increasing function of which of the following must be true. a. Preferences are convex O b. None of the other answers O c. Utility is not homothetic O d. Demand will be a corner solution
When goods are complements, there is a direct relationship between the price of one and the demand for the other. O 1) True O 2) False
The figure to the right represents the demand for ice cream cones. Which of the following statements is true? O A. Points a and b may not necessarily be the utility - maximizing quantities of ice cream cones at two different prices because we have no information on the consumer's budget or the price of other goods. B. Points a and b are the utility - maximizing quantities of ice cream cones at two different prices of ice cream. O C. Points a and b are derived independently of the utility - maximizing model. O D. Point a could be a utility - maximizing choice if the price is $3 but point b may not be because we have no information on the marginal utility per dollar when price changes. Price $3 1 3 4 Demand Quantity
Q1
am. 130.
please sir solve question 7
2/ Assume a piece of jewelry and 2 consecutive drops in its price. Also consider Alia’s demand to be relative elastic in the price range from p1 to p2, and that she perceives jewelry as a Giffen good in the price range from p2 to p3. Draw her price-consumption curve with well-behaved preferences. Clearly label your graph.
X2 Phil has preferences over olives (x₁) and ice creams (x₂) with a utility function, u(x₁, x₂)= x₁0.5+ x₂0.5. Suppose his income is $16 and the price of olives is $1 and the price of ice creams is $1, too. Which of the following is TRUE? O The utility level when he spends all of his income on good 1 is 8. O The optimal bundle Phil will choose to consume is (6,10). O The utility level at a bundle (1,16) is 11. None of the above. The optimal bundle Phil will choose to consume is (8,8).
The demand curve is a line that depicts how the quantity demanded of a particular good varies with income a line that depicts the optimal choice of two goods as the price of one good changes (when income and other prices are held constant) a line that depicts how the quantity demanded of a particular good varies with that same good's price. O a line that depicts the optimal choice of two goods at different levels of income at constant prices 2 The blue line in the graph below is an example of.... X₂ X₁ (p₁") x₁(P₁") x₁(P₁') A Demand Curve An Indifference Curve An Engel Curve A price-offer curve An income-offer curve

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