Question

Suppose an individual consumers two goods, with utility function U (x1; x2) = x1 + 6(x1x2)^1/2...

Suppose an individual consumers two goods, with utility function U (x1; x2) = x1 + 6(x1x2)^1/2 + 9x2. Formulate the utility maximization problem when she faces a budget line p1x1 + p2x2 = I. Find the demand functions for goods 1 and 2.

(b) Now consider an individual consumers with utility function U (x1; x2) = x1^1/2 + 3x2^1/2. Formulate the utility maximization problem when she faces a budget line p1x1 + p2x2 = I. Find the demand functions for goods 1 and 2.

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
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.
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!
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?)
1. (3 marks) Suppose a price-taking consumer chooses goods 1 and 2 to maximize her utility...
1. Suppose a price-taking consumer chooses goods 1 and 2 to maximize her utility given her wealth. Her budget constraint could be written as p1x1 + p2x2 = w, where (p1,p2) are the prices of the goods, (x1,x2) denote quantities of goods 1 and 2 she chooses to consume, and w is her wealth. Assume her preferences are such that demand functions exist for this consumer: xi(p1,p2,w),i = 1,2. Prove these demand functions must be homogeneous of degree zero.
Suppose an individual utility function is (i) U = min (X1, X2) and (ii) U =...
Suppose an individual utility function is (i) U = min (X1, X2) and (ii) U = 2X1 + X2. Show the indifference curves in both cases. Calculate and explain cross elasticity of X1 and X2 in (i) and (ii).
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...
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.
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.
Ted’s utility function over goods 1 and 2 is given by: U(x1,x2) = 4x11/2x21/4. What is...
Ted’s utility function over goods 1 and 2 is given by: U(x1,x2) = 4x11/2x21/4. What is Ted’s demand for goods 1 and 2 if the price of good 1 is 1, the price of good 2 is 2, and Ted has $18 to spend? Group of answer choices A.) (x1, x2) = (12,3) B.) (x1, x2) = (4,7) C.) (x1, x2) = (6,6) D.) (x1, x2) = (2,8)
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT