A consumer acquires bundles of two goods that we will call \"A\" and \"B\". Let's denote the quantities by the letters A and B. In fact, the consumer is observed to buy quanties in such a way that A = B. From her behavior is clear that to have more of any of the goods than of the other doesn't improve utility. (Formally utility is U = min{A, B}) <\/p>
<\/p>
a. What types of goods are these? Represent her preferences using the xaxis for A and the yaxisfor B. <\/p>
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b .Give an example of a pair of goods that have the relationship you stated in a (e.g. coffees and donuts in a given period of time). <\/p>
<\/p>
c . Call Pathe price of the first good and Pb the price of the second good. Suppose that the consumer has a monthly income Y. Derive the equations for: 1) the demand of A, 2) the demand of B, 3) the Engel curve of A, 4) the Engel curve of B. Explain intuitively the meaning of each. <\/p>
<\/p>
d. Choose any numbers you like for Pa and Pb. Fix Y = 100. At the prices you have chosen, what are the demands for A and B? Next, raise the price Pa leaving Pband leaving Y unchanged. What are the demands for A and B now? Graph both equilibriums. <\/p>
<\/p>
e. Describe the substitution and the income effects corresponding to d.<\/p>
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f (Label your indifference curves. How does the utility change?<\/p>", "transcribed_text": "", "related_book": { "title": "Leading Strategic Change In An Era Of Healthcare Transformation", "isbn": "3319808826, 978-3319808826", "edition": "1st Edition", "authors": "Jim Austin ,Judith Bentkover ,Laurence Chait", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/2024\/01\/65a7e2d8df9ef_40065a7e2d8d8762.jpg", "uri": "\/textbooks\/leading-strategic-change-in-an-era-of-healthcare-transformation-1st-edition-978-3319808826-212748", "see_more_uri": "" }, "free_related_book": { "isbn": "0645630802", "uri": "\/textbooks\/raising-an-organisations-collective-iq-1st-edition-978-0645630800-223332", "name": "Raising An Organisations Collective Iq", "edition": "1st Edition" }, "question_posted": "2024-06-21 08:05:50", "see_more_questions_link": "\/study-help\/questions\/business-human-resource-management-2020-May-22", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/two-fair-dice-are-tossed-and-the-following-events-are", "description": "Two fair dice are tossed, and the following events are defined: A: {Sum of the numbers showing is odd} B: {Sum of the numbers showing is 9, 11, or 12} Are events A and B independent? 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