Question

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.

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

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...
1. A consumer has an utility function given by U(x1, x2) = ? log(x1) + (1...
1. A consumer has an utility function given by U(x1, x2) = ? log(x1) + (1 ? ?) log(x2), with0<?<1. HerincomeisgivenbyM,andthepricesshefacesarep1 andp2, respectively. What is the optimal choice of x1 and x2? Follow the steps outlined in the math refresher notes. How does this result compare to the one in the notes? Explain.
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...
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).
A consumer has a utility function of the type U(x1, x2) = max (x1, x2). What...
A consumer has a utility function of the type U(x1, x2) = max (x1, x2). What is the consumer’s demand function for good 1?
1. Using the following utility function, U(x1,x2) = x1x2+x1+2x2+2 Find the demand functions for both x1...
1. Using the following utility function, U(x1,x2) = x1x2+x1+2x2+2 Find the demand functions for both x1 and x2 (as functions of p1, p2, and m). Thank you!
Bundes preferences are given by the utility function u(x1+x2)=x1+x2. Suppose p2=3 and m=24. Show all working...
Bundes preferences are given by the utility function u(x1+x2)=x1+x2. Suppose p2=3 and m=24. Show all working and plot this consumers PCC when p1 drops continuously from 6 to 2.
For each of the following utility functions, explain whether the preferences that they represent are strictly...
For each of the following utility functions, explain whether the preferences that they represent are strictly convex. Use indifference curve diagrams to help explain your answers. 1. Preferences represented by u (x1, x2) = x1 + x2. 2. Preferences, represented by u (x1, x2) = min {x1, x2}.
3. Suppose that a consumer has a utility function u(x1, x2) = x1 + x2. Initially...
3. Suppose that a consumer has a utility function u(x1, x2) = x1 + x2. Initially the consumer faces prices (1, 2) and has income 10. If the prices change to (4, 2), calculate the compensating and equivalent variations. [Hint: find their initial optimal consumption of the two goods, and then after the price increase. Then show this graphically.] please do step by step and show the graph
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...