Suppose that the utility function is U (x, y) = x¹/³ + y¹/³, then x and y are: Hint: in this particular example, the gross complementarity or substitution among goods has the symmetry property. (a) Net complements and gross substitutes (b) Net complements and gross complements (c) Net substitutes and gross substitutes (d) Net substitutes and neither gross substitutes nor gross complements None of them

Suppose that the utility function is U (x, y) = x¹/³ + y¹/³, then x and y are: Hint: in this particular example, the gross complementarity or substitution among goods has the symmetry property. (a) Net complements and gross substitutes (b) Net complements and gross complements (c) Net substitutes and gross substitutes (d) Net substitutes and neither gross substitutes nor gross complements None of them

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter6: Demand Relationships Among Goods

Section: Chapter Questions

Problem 6.8P

See similar textbooks

Similar questions

The following are correct statements about the Income Effect (IE) and Substitution Effect (SE) coming from an increase in Px, EXCEPT: Question 7 options: I.E. is the result of a decline in Purchasing Power on consumers coming from an increase in Px. S.E. is the result of the substitution for alternative goods that the consumer implement as a result of an increase in Px. If two goods are close substitutes, then SE is stronger than IE. If two goods are complements, then IE is equal in proportion than SE.
Q30 The marginal rate of substitution is the... a. Rate of substitution between the marginal values of any two goods. b. Rate of substitution between the total utility of any two goods. c. Substitution of one good for another as we move along the budget line. d. Amount of one good the consumer is willing to give up in exchange for another to keep total expenditure unchanged. e. Amount of one good the consumer is willing to give up in exchange for another to remain indifferent.
Suppose the two goods, X1 and X2, are perfect substitutes at the ratio of 1 to 2 – each unit of X1 is worth, to the consumer, 2 units of X2. The consumer had an income of $100. P1=5, and P2=3. Find the optimal basket of this consumer.
The individual's utility is given by the following function: ?(?,?)=−1/?−1/? a) Calculate the Marshallian demand functions for both goods.b) Determine whether x and y are gross substitutes or gross complements. Is there any asymmetry in the gross definitions?c) Without actually doing so, determine whether x and y are net substitutes or net complements. Please explain.
If Edna buys more pasta when the price of pastaincreases, we can infer that for Ednaa. pasta is a normal good for which the incomeeffect exceeds the substitution effect.b. pasta is a normal good for which the substitutioneffect exceeds the income effect.c. pasta is an inferior good for which the incomeeffect exceeds the substitution effect.d. pasta is an inferior good for which thesubstitution effect exceeds the income effect.
Which of the following statements is correct? Suppose leisure is a normal good, then an increase in non-labor income always increases labor supply. Suppose leisure is a normal good, then an increase in wage rate increases labor supply if the income effect dominates the substitution effect. Suppose leisure is an inferior good, then an increase in non-labor income increases leisure hours. Suppose leisure is a normal good, then an increase in non-labor income reduces labor supply. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Draw indifference curves for two goods that are perfect complements and two goods thatare perfect substitutes. How do the indifference curves relate to utility functions?
If the price pf pasta increases and a consumer buys more pasta, we can infer that a. pasta is a normal good and the income effect is greater than the substitution effect. b. pasta is a normal good and the substitution effect is greater than the income effect. c. pasta is an an inferior good and the income effect is greater is greater than the substitution effect. d. pasta is an inferior good and the substitution effect is greater than the income effect.
Suppose that we have a utility function involving two goods that is linear of the form U =ax+by.a. Derive demand functions for x and yb. Derive indirect utility functionsc. Derive the expenditure function for this utility function. Hint: The expenditure functionwill have kinks at various price ratios.
a. Is the “more is better” assumption satisfied for both goods? Explain.b. What type of function is this? Explain.c. Provide expressions for the marginal utilities of x and y and does the marginal utility of x increase, remain constant, or diminish as the consumer buysmore units of x? Explain. Does the marginal utility of y increase, remain constant, or diminish as the consumer buysmore units of y? Explain.d. Provide an expression for the marginal rate of substitution of x for y.e. Is MRSx,y diminishing, constant, or increasing as the consumer substitutes more x for y alongan indifference curve? Explain.f. On a graph with x on the horizontal axis and y on the vertical axis, draw the indifferencecurves for U1 and U2 where U2 has a higher value than U1
a. Is the “more is better” assumption satisfied for both goods? Explain.b. What type of function is this? Explain.c. Provide expressions for the marginal utilities of x and y and does the marginal utility of x increase, remain constant, or diminish as the consumer buysmore units of x? Explain. Does the marginal utility of y increase, remain constant, or diminish as the consumer buysmore units of y? Explain.d. Provide an expression for the marginal rate of substitution of x for y.e. Is MRSx,y diminishing, constant, or increasing as the consumer substitutes more x for y alongan indifference curve? Explain.f. On a graph with x on the horizontal axis and y on the vertical axis, draw the indifferencecurves for U1 and U2 where U2 has a higher value than U1 instructions: answer d,e, and f only
The marginal rate of substitution measures the: extra utility that a consumer derives from successive units of a product. consumer's willingness to substitute one product for another so that total utility will remain constant. magnitude of the substitution effect. total utility received by a consumer when equilibrium is achieved.