Question

Show that utility u(x1,x2)=2√x1+√x2 is strictly quasi concave(Hint: You can prove it by showing the utility...

Show that utility u(x1,x2)=2√x1+√x2 is strictly quasi concave(Hint: You can prove it by showing the utility function has diminishing marginal rate of substitution).

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Al Einstein has a utility function that we can describe by u(x1, x2) = x 2...
Al Einstein has a utility function that we can describe by u(x1, x2) = x 2 1 + 2x1x2 + x 2 2 . Al’s wife, El Einstein, has a utility function v(x1, x2) = x2 + x1. (a) Calculate Al’s marginal rate of substitution between x1 and x2. (b) What is El’s marginal rate of substitution between x1 and x2? (c) Do Al’s and El’s utility functions u(x1, x2) and v(x1, x2) represent the same preferences? (d) Is El’s...
1. Al Einstein has a utility function that we can describe by u(x1, x2) = x21...
1. Al Einstein has a utility function that we can describe by u(x1, x2) = x21 + 2x1x2 + x22 . Al’s wife, El Einstein, has a utility function v(x1, x2) = x2 + x1. (a) Calculate Al’s marginal rate of substitution between x1 and x2. (b) What is El’s marginal rate of substitution between x1 and x2? (c) Do Al’s and El’s utility functions u(x1, x2) and v(x1, x2) represent the same preferences? (d) Is El’s utility function a...
Suppose a consumer has quasi-linear utility: u(x1,x2 ) = 3x1^2/3 + x2 . The marginal utilities...
Suppose a consumer has quasi-linear utility: u(x1,x2 ) = 3x1^2/3 + x2 . The marginal utilities are MU1(x) = 2x1^−1/3 and MU2 (x) = 1. Throughout this problem, assume p2 = 1 1.(a) Sketch an indifference curve for these preferences (label axes and intercepts). (b) Compute the marginal rate of substitution. (c) Assume w ≥ 8/p1^2 . Find the optimal bundle (this will be a function of p1 and w). Why do we need the assumption w ≥ 8/p1^2 ?...
The utility function is given by u (x1,x2) = x1^0.5 + x2^0.5 1) Find the marginal...
The utility function is given by u (x1,x2) = x1^0.5 + x2^0.5 1) Find the marginal rate of substitution (MRSx1,x2 ) 2) Derive the demand functions x1(p1,p2,m) and x2(p1, p2,m) by using the method of Lagrange.
2. A consumer has the utility function U ( X1, X2 ) = X1 + X2...
2. A consumer has the utility function U ( X1, X2 ) = X1 + X2 + X1X2 and the budget constraint P1X1 + P2X2 = M , where M is income, and P1 and P2 are the prices of the two goods. . a. Find the consumer’s marginal rate of substitution (MRS) between the two goods. b. Use the condition (MRS = price ratio) and the budget constraint to find the demand functions for the two goods. c. Are...
A consumer has utility function U(x1,x2)= x1x2 / (x1 + x2) (a) Solve the utility maximization...
A consumer has utility function U(x1,x2)= x1x2 / (x1 + x2) (a) Solve the utility maximization problem. Construct the Marshallian demand function D(p,I) and show that the indirect utility function is V (p, I) = I / (p1+ 2 * sqrt (p1*p2) + p2) (b) Find the corresponding expenditure function e(p; u). HINT: Holding p fixed, V and e are inverses. So you can find the expenditure function by working with the answer to part (a). (c) Construct the Hicksian...
The utility function is given by u (x1, x2) = x1^0.5+x2^0.5 1) Find the marginal rate...
The utility function is given by u (x1, x2) = x1^0.5+x2^0.5 1) Find the marginal rate of substitution (MRSx1,x2 ) 2) Derive the demand functions x1(p1, p2, m) and x2(p1,p2, m) by using the method of Lagrange.
Show that the utility functions u(x1, x2)=sqrt(x1) *sqrt(x2) and u(x1, x2) = 0.7 log(x1) + 0.3...
Show that the utility functions u(x1, x2)=sqrt(x1) *sqrt(x2) and u(x1, x2) = 0.7 log(x1) + 0.3 log(x2) represent different preferences. Hint: find two bundles such that a consumer’s prefer- ences are reversed under the above two utility functions.
Consider utility function u(x1,x2) =1/4x12 +1/9x22. Suppose the prices of good 1 and good 2 are...
Consider utility function u(x1,x2) =1/4x12 +1/9x22. Suppose the prices of good 1 and good 2 are p1 andp2, and income is m. Do bundles (2, 9) and (4, radical54) lie on the same indifference curve? Evaluate the marginal rate of substitution at (x1,x2) = (8, 9). Does this utility function represent convexpreferences? Would bundle (x1,x2) satisfying (1) MU1/MU2 =p1/p2 and (2) p1x1 + p2x2 =m be an optimal choice? (hint: what does an indifference curve look like?)
Qin has the utility function U(x1, x2) = x1 + x1x2, where x1 is her consumption...
Qin has the utility function U(x1, x2) = x1 + x1x2, where x1 is her consumption of good 1 and x2 is her consumption of good 2. The price of good 1 is p1, the price of good 2 is p2, and her income is M. Setting the marginal rate of substitution equal to the price ratio yields this equation: p1/p2 = (1+x2)/(A+x1) where A is a number. What is A? Suppose p1 = 11, p2 = 3 and M...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT