Question

Consider a consumer who consumes two goods and has utility function

u(x1,x2)=x2 +√x1.

The price of good 2 is 1, the price of good 1 is p, and income is
m.

(1) Show that a) both goods are normal, b) good 1 is an ordinary good, c) good 2 is a gross substitute for good 1.

Answer #1

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(2) Compute the price elasticity of d(p).
Compute the income elasticity of d(p).
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Explain.
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variations. [Hint: find their initial optimal consumption
of the two goods, and then after the price increase. Then show this
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please do step by step and show the graph

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P1X1 + P2X2 = M ,
where M is income, and P1 and P2 are the
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a. Find the consumer’s marginal rate of substitution (MRS)
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b. Use the condition (MRS = price ratio) and the budget
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c. Are...

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1. The perfect substitute utility function at p=1
2. The Cobb-Douglas utility function as p -->0
3. The Leontiff (of min(x1,x2) as p--> -infinity
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1. Find the marshallian...

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Suppose a consumer with the above utility function faces prices
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Imran consumes two goods, X1 and X2. his
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(p1) is $2. The price of good 2 (p2) is $1.
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min{2x1, 7x2}
b.) U(x1,x2) =
9x1+4x2
c.) U(x1,x2) =
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Please show all your work.

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