/T). and pays pX= 4, pY= 2. Next month pX= 2.Provide a labelled indifference curve diagram to illustrate and quantify the Hicksian SE (A to B) and IE (B to C). Derive the Marshallian demand curve and compute the change in consumer surplus. No diagram.The CV is equal to and ACS is equal to
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- The consumer has an incom Mand a utility function of the form u (x1; x2) = aInx1 + (1 - a)Inx2 If the prices of the two goods are given by p1 and p2, derive the Hicksian demand functions for a given utility level U: Derive the expenditure function. Using the concept of duality, derive the indirect utility function.For a > 0, consider a consumer whose utility function amounts to u(x1, x2) = − exp(−ax1x2). Can you take first order conditions to solve the utility maximization problem? Explain your argument. Next solve the utility maximization problem, and derive Marshallian demands and the indirect utility function. Given your calculations, state and use the duality theorem to find the expenditure function and Hicksian demand 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.Due to good weather, there is an increase in the demand for the good. The new demand equation is Qd = 190 – 2P. The government is trying to decide between two options: Maintain the number of quotas and let the market adjust, orMaintain the price support and increase the number of quotas. Suppose that the government decides to maintain the number of quotas and let the market adjust. Calculate:ii) the consumer surplusiii) the producer surplusiv) dead weight loss HINT: Sketch the supply and demand equations. Which of the two options would be preferred by the producers? Which of the two options would be preferred by society as a whole?
- Suppose a consumer with a utility function U(x,y) =x^(0.5)y^(0.5) and an income of $1,000.00. Considering that products X and Y are sold by the kilo and that their prices are 50.00 and 100.00 respectively, calculate: a) Maximizing amounts of x and y for the consumer b) Graphically sketch the consumer balance c) What would be the impact on the utility of this consumer, if a policy of distribution of good X was established so that each period the consumer "earns" 20 units of X at no cost? What will your new balance be?Properties of Marshallian demand: The maximization problem for U(x,y)=xay1-a subject to pxx+pyy=m 1). Using the Marshallian demand functions obtained back then, show that x*(px ,py, pm) and y*(px ,py, pm)are homogeneous of degree 0 in prices and income. 2). Show that the indirect utility function, v(px, py, m), is also homogeneous of degree 0 in prices andincome. 3). Use Roy’s identity and show that you can indeed recover the original Marshallian demand functions.Explain what is the relationship between the measurement of welfare change of consumer surplus, Hicksian EV, and Hicksian CV for a normal good X, when there is a tax on good X, and assuming that good X & good Y are perfect complements
- 33. Suppose MRSx,y = MUx/MUy = 0.1(a) If the consumer substitutes 10 units of X for one unit of Y, then the utility remainsunchanged(b) Regardless of prices, the consumer will only consume Y(c) If the consumer substitutes 1 unit of Y for 0.1 unit of X, then the utility remainsunchanged(d) Regardless of prices, the consumer will only consume XMa1. Please give only typed answer. Assume the following expendiexpenditure function. (a) Interpret this function. In particular, what will happen to the optimal expenditure, if the consumer wanted to maintain a high level of utility? (b) Calculate Hicks demand for good 2. (c) Suppose that p1 = 1, p2 = 1 and that U = 28. Calculate and interpret the variation compensation if the price of good 2 increases by $1.I need asnwers of d,e,f. 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?
- Suppose that X is an inferior good. A. Show using well labeled diagrams how you would derive the Marshallian Demand curve and compensated demand curve holding utility constant for a consumer maximizing her welfare subject to a budget constraint. B. Derive the consumer's compensated demand curve and draw the demand curve carefully for X, Under the two following rules to measure the amount of compensation required to estimate the substitution and income effects. (1) holding real income constant. (2) holding production possibilities constant (assume linear). C. Under what real model circumstance would you employ these scenario for measuring the compensated demand function for a good?Assume that utility is given by u(x, y) = x0.3y0.7 1. Derive the Walrasian demand function. Then use the derived Walrasian de- mand functions to compute the indirect utility function. 2. Derive the expenditure function and the Hicksian (compensated) demand functions for this case. Hint: Use Propositions 5 and 4.Intermediate Econmics Suppose an agent has a utility function u (x, y) = x2y2(a) Set up the expenditure minimization problem and solve for the Hicksian demand functions asfunctions of prices and utility.(b) Find the expenditure function as a function of prices and utility.