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I need help with question 8 Practice Questions (Chapters 6: Demand) EC270: Microeconomic Theory I 8. Daisy received a tape recorder as a birthday gift
I need help with question 8
Practice Questions (Chapters 6: Demand) EC270: Microeconomic Theory I 8. Daisy received a tape recorder as a birthday gift and is not able to return it. Her utility function is u(r, y. 2) = r + z* f(y), where = is the number of tapes she buys, y is the number of tape recorders she has, and r is the amount of money she has left to spend. f(y) = 0 ify p2, the demand functions for goods 1 and 2 are given by the equations: (i) a1 = m - 1, and (1i) 12 - P, where m is income and pi and p2 are prices. Let the horizontal axis represent the quantity of good 1. Let pi = 1 and p2 = 2. Then for m > 2, the income offer curve is: (a) a vertical line. (b) a horizontal line. (c) a straight line with slope 2. (d) a straight line with a slope of . (e) None of the above. 10. Mary has homothetic preferences. When her income was $1,000, she bought 40 books and 60 newspapers. When her income increased to $1,500, and prices did not change, she bought: (a) 60 books and 60 newspapers. (b) 80 books and 120 newspapers. (c) 60 books and 90 newspapers. (d) 40 books and 120 newspapers. (e) There is not enough information for us to determine what she would buyStep by Step Solution
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