8 We're back ordering from the value menu at McDonalds. Suppose your utility function for Jr Chickens and McDoubles (McDubbahs) is given below. C is the quantity of Jr Chickens and D is quantity of McDoubles. U(C,D)=C31D32MUC=3C32D32MUD=3D312C31 a) Derive your Hicksian demand for both Jr Chickens and McDoubles. b) Suppose you decided you wanted to achieve a utility of 8 , and PC=1 and PD=2. What would be your cost minimizing bundle of Jr Chickens and McDoubles? c) Show graphically the optimal bundles on a plot with C on the x-axis and D on the y-axis. Be sure to include the indifference curve and a budget constraint. Label everything and draw to scale. d) Explain the relationship between Marshallian and Hicksian demands at optimum. Use the Marshallian Demand you derived in Assignment 1 and choice of Jr Chickens and McDoubles when PC=1,PD=2 and income M=24. e) Derive your Indirect Utility and Expenditure functions f) Suppose McDonalds announced a "Dubbah Days" promotion which offered PD=.25. What is your total change in demand for McDoubles? Decompose this between the substitution and income effects by both the Slutsky and Hicks methods g) Calculate your compensating and equivalent variation for this promotion 8 We're back ordering from the value menu at McDonalds. Suppose your utility function for Jr Chickens and McDoubles (McDubbahs) is given below. C is the quantity of Jr Chickens and D is quantity of McDoubles. U(C,D)=C31D32MUC=3C32D32MUD=3D312C31 a) Derive your Hicksian demand for both Jr Chickens and McDoubles. b) Suppose you decided you wanted to achieve a utility of 8 , and PC=1 and PD=2. What would be your cost minimizing bundle of Jr Chickens and McDoubles? c) Show graphically the optimal bundles on a plot with C on the x-axis and D on the y-axis. Be sure to include the indifference curve and a budget constraint. Label everything and draw to scale. d) Explain the relationship between Marshallian and Hicksian demands at optimum. Use the Marshallian Demand you derived in Assignment 1 and choice of Jr Chickens and McDoubles when PC=1,PD=2 and income M=24. e) Derive your Indirect Utility and Expenditure functions f) Suppose McDonalds announced a "Dubbah Days" promotion which offered PD=.25. What is your total change in demand for McDoubles? Decompose this between the substitution and income effects by both the Slutsky and Hicks methods g) Calculate your compensating and equivalent variation for this promotion