Question
GROUP A ID number Min Max Median 1-digit 2-digit 44431724174229 44380461184330 44562209194532 46209050193826 1. An agent has a utility function over goods 1 and 2
GROUP A
ID numberMinMaxMedian1-digit2-digit
44431724174229
44380461184330
44562209194532
46209050193826
1. An agent has a utility function over goods 1 and 2 of the form, where c is your
individual numberand dis your minimum number. The agent's income is equal to your 2-digit
number.Thepriceofgood1isyour maximumnumberand the price of good 2 is your
median number.
Derive the agent's demand functionsfor good 1 and good 2. Calculate the quantities of good
1 and good 2 in the agent's optimum bundle.
2. An agent has a utility function over goods 1 and 2 of the form, where c is your 1-digitnumberand dis your minimumnumber.Theagent'sincomeisequaltoyour 2-digit
number. Initially, the price of good 1 is your median numberand the price of good 2 is your
individual number.
Let the price of good 1 change to your maximum number. For good 1, determine for this price
change the
a)total price effect
b)the substitution effect
c)the income effect
3. For the same problem you analysed in Question 2, find for that price change the
a)Laspeyres measureof the welfare change
b)Paasche measureof the welfare change
c)compensating variation
d)equivalent variation
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started