I need answers E,F,G 2.Think about a consumer with a utility function of U(x,y) =2xy+1, his budgetconstraint is px*x +py*y = m.а.Please derive the Marshallian demand functions.b.What would happen to the demand of each good if m increases(assume priceis alwavs positive)? Are they normal good or inferior good?с.Please derive the indirect utility function.d.Please derive the expenditure function.If originally m = 20, px=1, py=5.е.What is his optimal consumption?f.What is his maximum utility level?Now if px has increased to 2.g.After the price change, how much should be compensated to maintain hisoriginal utility level?Use Shaphard's Lemma to derive the Hicksian demand functions.After the price change and the compensation, what is his optimalh.i.consumption?j.consumption?If there is no compensation, after the price change, what is his optimal

Given Utility function U(x,y)=2xy+1 Budget constraint: pxx+pyy=m

2. Think about a consumer with a utility function of U(x,y) =2xy+1, his budget constraint is px*x +py*y= m. а. Please derive the Marshallian demand functions. b. What would happen to the demand of each good if m increases(assume price is alwavs positive)? Are they normal good or inferior good? Please derive the indirect utility function. Please derive the expenditure function. с. d. If originally m = 20, px=1, py=5. What is his optimal consumption? What is his maximum utility level? е. f. Now if px has increased to 2. g. After the price change, how much should be compensated to maintain his original utility level?

2. Think about a consumer with a utility function of U(x,y) =2xy+1, his budget constraint is pxx +pyy= m. а. Please derive the Marshallian demand functions. b. What would happen to the demand of each good if m increases(assume price is alwavs positive)? Are they normal good or inferior good? Please derive the indirect utility function. Please derive the expenditure function. с. d. If originally m = 20, px=1, py=5. What is his optimal consumption? What is his maximum utility level? е. f. Now if px has increased to 2. g. After the price change, how much should be compensated to maintain his original utility level?

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter6: Consumer Choice And Demand

Section: Chapter Questions

Problem 15PAE

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5. Consider a consumer whose utility function isu(x,y) = sqrt(xy) (MRS(x,y)=y/x)a. Assume the consumer has income $120 and initially faces the prices px = $1 and py = $1. Howmuch x and y would they buy? Draw the budget constraint and the demands. b. Next, suppose the price of x were to increase to $2. How much would they buy now? Draw thisin the same figure.c. Decompose the total effect of the price change on demand for x into the substitution effect and theincome effect. That is, determine precisely how much of the change is due to each of thecomponent effects. (Hint: See the lecture notes for the two properties that determine the locationof “z”, the reference point for distinguishing the income and substitution effects.)
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I need asnwers of a,c,g. Assume there is consumer, his utility function is u(x,y) =8 * x0.5+y , and his budget constraint is px*x +y = m, which implies py = 1. a.Please derive the Marshallian demand function of x. b.Please derive the indirect utility function. c. Please derive the expenditure function If originally m = 40, px=2. d. What is his original highest utility level? Now px has decreased to 1, m and py do not change. e. What is his new maximum utility level? f. Based on (c) (d) and (e), what is his compensating variation? g.Based on (c) (d) and (e), what is his equivalent variation?