Question

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

What is the sign and interpretation of...

∂2U/∂x2x1 if x1 and x2 are complements=

∂2U/∂x2x1 if x1 an d x2 are substitutes
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Ans: The perfect substitutes are those goods which can be used in place of each other.

The perfect complements are those goods which are used together.

The double partial derivative of x2 wrt x1 is positive means the marginal utility of x2 has a positive effect when x1 is consumed, perfect complement goods.

The double partial derivative of x2 wrt x1 is negative means the marginal utility of x2 has a negative effect when x1 is consumed, perfect substitute goods.

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
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...
Given a utility function for perfect complements: U(x1,x2) = min{x1,βx2}, where β is a positive num-...
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.
Suppose x1 and x2 are perfect substitutes with the utility function U(x1, x2) = 2x1 +...
Suppose x1 and x2 are perfect substitutes with the utility function U(x1, x2) = 2x1 + 6x2. If p1 = 1, p2 = 2, and income m = 10, what it the optimal bundle (x1*, x2*)?
Are hamburgers and buns complements or substitutes? What then is the relationship between the change in...
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.
Let X1 and X2 have the joint pdf f(x1,x2) = 8x1x2    0<x1 <x2 <1 0....
Let X1 and X2 have the joint pdf f(x1,x2) = 8x1x2    0<x1 <x2 <1 0. elsewhere What are the marginal pdfs of x1 and x2? Find the expected values of x1 and x2. 3.   What is the expected value of X1X2? (Hint: Define g(X1, X2) = X1X2 and extend the definition of expectation of function of a random variable to two variables as follows: E[g(X1, X2)] = ? ? g(x1, x2)f(x1, x2)dx1dx2. 4. Suppose that Y = X1/X2. What...
Suppose the two goods, X1 and X2, are perfect substitutes at the ratio of 1 to...
Suppose the two goods, X1 and X2, are perfect substitutes at the ratio of 1 to 2 – each unit of X1 is worth, to the consumer, 2 units of X2. The consumer had an income of $100. P1=5, and P2=3. Find the optimal basket of this consumer.
Let x1 and x2 be random vektor such that x1+x2 and x1-x2 are independent and each...
Let x1 and x2 be random vektor such that x1+x2 and x1-x2 are independent and each normal distributed. Show that the random variable vector X=(x1,x2)' is distributed bivariate normal and determine its expected value and covariance matrix
Max Z = X1 - X2 + 3X3 s.t. X1+X3 = 5 X1+X2 <= 20 X2+X3...
Max Z = X1 - X2 + 3X3 s.t. X1+X3 = 5 X1+X2 <= 20 X2+X3 >= 10 X1 , X2 , X3 >= 0 a) Put the problem into standard form, using slack, excess, and artificial variables. b) Identify the initial BV and NBV along with their values. c) Modify the objective function using an M, a large positive number. d) Apply the Big M method to find the optimal solution
LetX1 andX2 have joint density function f(x1,x2) =( 30x1x2^2, x1 −1≤ x2 ≤1−x1, 0≤ x1 ≤1,...
LetX1 andX2 have joint density function f(x1,x2) =( 30x1x2^2, x1 −1≤ x2 ≤1−x1, 0≤ x1 ≤1, 0 otherwise. (a) Find the marginal density of X1. (b) Find the marginal density of X2. (c) Are X1 and X2 independent?(why/why not) (d) Find the conditional density of X2 given X1 = x1 (e) Compute Cov(X1,X2)
LetX1 andX2 have joint density function f(x1,x2) =( 30x1x2^2, x1 −1≤ x2 ≤1−x1, 0≤ x1 ≤10...
LetX1 andX2 have joint density function f(x1,x2) =( 30x1x2^2, x1 −1≤ x2 ≤1−x1, 0≤ x1 ≤10 , otherwise. (a) Find the marginal density of X1. (b) Find the marginal density of X2. (c) Are X1 and X2 independent?(why/why not) (d) Find the conditional density of X2 given X1 = x1 (e) Compute Cov(X1,X2)
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT