Question 5

4 points Save Answer

Consider Billie, whose preferences are either Perfect Substitutes, Perfect Complements or Cobb-Douglas with parameter a, allocating a given

endowment between two goods whose prices are p and 1 respectively. Billie's endowments of the two goods are 10 and 50 units respectively.

In the first situation p was 2 and the individual chose to consume 10.5 units of good 1 and 49 units of good 2. In the second situation p was

3 and the individual chose to consume 8 units of good 1 and 56 units of good 2. In a third situation p was 0.5.

What are the individual's gross demands for the two goods at the third price above?

Question 5 4 points Save Answer Consider Billie, whose preferences are either Perfect Substitutes, Perfect Complements or Cobb-Douglas with parameter a, allocating a given endowment between two goods whose prices are p and 1 respectively. Billie's endowments of the two goods are 10 and 50 units respectively. In the first situation p was 2 and the individual chose to consume 10.5 units of good 1 and 49 units of good 2. In the second situation p was 3 and the individual chose to consume 8 units of good 1 and 56 units of good 2. In a third situation p was 0.5. What are the individual's gross demands for the two goods at the third price above? 0 91* = 38.5, q,* = 33 0 91" = 14.67, q2* = 7.33 ( 91* = 12.22, q2* = 24.44 0 91* = 7.33, q2* = 14.67 0 91" = 33, q2* = 38.5