Question
An individual has preferences over two goods (X and Y ) from which they must choose. These preferences are represented by the utility function U
An individual has preferences over two goods (X and Y ) from which they must choose. These preferences are represented by the utility function U = X1/2 Y1/2. The consumer is given an income of I, and faces prices PX and PY for the respective goods.
(a) List the exogenous and endogenous variables.
(b) The consumer's MRSX,Y = Y /X. Find this consumer's demand functions for X and Y.
(c) Find this individual's income elasticity of demand for good X ("X,I )
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Labor and Employment Law Text and Cases
Authors: David Twomey
15th edition
1133188281, 978-1133711841, 1133711847, 978-1285247632, 978-1133188285
