Prices of wheat and cotton are p1 TL and p2 TL in a market. Consider that there are 30 consumers in the market in total, 20 of these each with utility U1(x1, x2) = x1 5 x2 3 , and income m1 TL, and 10 of these each with utility U2(x1, x2) = x1 x2 + x1, and income m2 TL. a) Find the ordinary demand for a consumer with U1(x1, x2) = x1 5 x2 3 . b) Find the ordinary demand for a consumer with U2(x1, x2) = x1 x2.
Prices of wheat and cotton are p1 TL and p2 TL in a market. Consider that there are 30 consumers in the market in total, 20 of these each with utility U1(x1, x2) = x1 5 x2 3 , and income m1 TL, and 10 of these each with utility U2(x1, x2) = x1 x2 + x1, and income m2 TL.
a) Find the ordinary
b) Find the ordinary demand for a consumer with U2(x1, x2) = x1 x2.
c) Find the income elasticity of a consumer’s demand in market 2 whose utility is U2(x1, x2) = x1 x2 + x1, evaluating it in a setting where p1 = 3TL and p2 = 4TL and m2 = 100TL.
d) Find the aggregate demand in both markets where p1 = 3TL and p2 = 4TL m1 = 150TL and m2 = 100TL.
e) Does revenue increase in market 1 due to a
f) Consider the aggregate demand in market 1 as given in part (d), and assume this also defines the relationship between price in market 1 with respect to quantity in market 1. Define the inverse demand function and compute marginal revenue in the market
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