Consider an individual making choices over two goods, x and y with initial prices px=5 and py=
Fantastic news! We've Found the answer you've been seeking!
Question:
Consider an individual making choices over two goods, x and y with initial prices px=5 and py= 2, with income I= 100:
a) If the individual's preferences can be represented by the utility function u = 4x+ 2y; find the income, substitution and total effects of a decrease in the price of x to px= 3.
b) If the individual's preferences can be represented by the utility function u = min(4x,2y); find the income, substitution and total effects of a decrease in the price of x to px= 3.
c) If the individual’s preferences can be represented by the utility function u= 4xy, and the income, substitution and total effects of a decrease in the price of x to px= 4.
Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
Posted Date: