Question

what are complements? what is their function?

Answer #1

Complement system:

Types of complement system:

Function of complement system:

Given a utility function for perfect complements: U(x1,x2) =
min{x1,βx2}, where β is a positive num- ber, and a budget
constraint: p1x1 + p2x2 = Y , where p1 and p2 are prices of good 1
and good 2 respectively, Y is the budget for the complements. Find
the demand functions for good 1 and good 2.

What is the elasticity of substitution of a two inputs that are
perfectly complements? Explain why when two inputs are perfect
complements the isoquant is right-angled.

What is the difference between substitutes and complements in
consumption? What effect will a
decrease in the price of inkjet printers have on the demand for
inkjet cartridges?

Suppose a consumer views two goods, X and Y, as perfect
complements. Her utility function is given by U = MIN [2X, Y].
Sketch the graph of the consumers indifference curve that goes
through the bundle X = 5 and Y = 6. Put the amount of Y on the
vertical axis, and the amount of X on the horizontal axis. Which of
the three assumptions that we made about consumer preferences is
violated in this case?

Suppose a consumer views two goods, X and Y, as perfect
complements. Her utility function is given by U = MIN [2X, Y].
Sketch the graph of the consumers indifference curve that goes
through the bundle X = 5 and Y = 4. Put the amount of Y on the
vertical axis, and the amount of X on the horizontal axis. Which of
the three assumptions that we made about consumer preferences is
violated in this case?

Are hamburgers and buns complements or substitutes? What then is
the relationship between the change in the consumption of each good
in terms of the price change of the other (that is, how does
x1 change as p2changes, and
vice versa)? Explain.

What is the sign and interpretation of...
∂2U/∂x2x1 if x1 and x2
are complements=
∂2U/∂x2x1 if x1 an d
x2 are substitutes

Consider the Leontiev (perfect complements) production function
f(x, y) = M in x 9.6 , y 5.2 .
(A) How many units of good y would be a perfect complement for 1
unit of good x? What is the equation of the firm’s kink line?
(B) Assume the firm has a production quota of q = 400 units.
Graph the firm’s level-400 isoquant. What are the coordinates of
the kink?
(C) Suppose the input prices are (px, py) = (16,...

Problem 3. Consider the Leontiev (perfect complements)
production function f(x, y) = M in x 9.6 , y 5.2 .
(A) How many units of good y would be a perfect complement for 1
unit of good x? What is the equation of the firm’s kink line?
(B) Assume the firm has a production quota of q = 400 units.
Graph the firm’s level-400 isoquant. What are the coordinates of
the kink?
(C) Suppose the input prices are (px, py)...

Suppose a firm makes use of a technology in which Labor and
Capital are perfect complements, and which is represented by the
production function: ?(?, ?) = ???{?, 2?}. Given inputs’ prices
w=r=1, which of the following combinations of inputs is cost
minimizing for the output target y = 10:
a. (? = 20, ? = 10);
b. (? = 10, ? = 5);
c. (? = 2, ? = 1);
d. (? = 20, ? = 20);
e. (?...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 18 minutes ago

asked 20 minutes ago

asked 33 minutes ago

asked 47 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago