3 8. Let be the utility function U(x, y) = (xi + 2yi), , where x and y a are the quantities %3D consumed of two goods. (a) Show that the functional equation U(x, y) = U(2,2) defines y as a function of x in a %3D neighborhood of point (2, 2). (b) If the quantity consumed of good x increases by 1 unit, by how much does the quantity have to increase or decrease? Consumed of the good and to keep utility constant? (c) If the quantity consumed of good x increases by 1%, by how much does the quantity have to increase or decrease? Consumed of the good and to keep utility constant?

3 8. Let be the utility function U(x, y) = (xi + 2yi), , where x and y a are the quantities %3D consumed of two goods. (a) Show that the functional equation U(x, y) = U(2,2) defines y as a function of x in a %3D neighborhood of point (2, 2). (b) If the quantity consumed of good x increases by 1 unit, by how much does the quantity have to increase or decrease? Consumed of the good and to keep utility constant? (c) If the quantity consumed of good x increases by 1%, by how much does the quantity have to increase or decrease? Consumed of the good and to keep utility constant?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.7P

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