Q4. An individual has the following demand function for a good: D(p)1 = 15 0.53). (a) Calculate this individual's price elasticity of demand where price is p = 10 and interpret your answer. (b) Assume that there is only one other consumer of this good and that their demand function is: D(p)1 = 18 0.6p. Derive the market demand function for this good. (d) Assume that there are two rms suppling this good with identical individual supply functions: .S'(p),- = 0.4-3). Derive the market supply function for this good. Section 2 Consumer Theory (25 Marks) Q1. Q2. Q3. A consumer has the following utility function: U = x0'5y0'5 and is given the choice between two bundles a:[25,36] and b:[28,28]. (a) Calculate the utility of consuming each bundle. (b) Explain which bundle the conSumer should choose if unconstrained by income. (c) ASSume the consumer is now constrained by income, m = 112, and faces the following market prices, p1 = p, = 2. Which bundle would they now choose? A consumer has the following utility mction (note, goods it & y are perfect substitutes) and budget constraint: U=x+y BC;12 = 2x + 33: (a) Calculate the utility this consumer would get from consuming bundle c:[3,5]. (b) Calculate the marginal rate of substitution and interpret your answer. (0) What is this consumer's optimal bundle? Sketch your answer. A consumer has the following utility function and corresponding marginal rate of substitution: U=xy MRS: HIV! (a) Assume that they have an income of m = 48 and face the following market prices, px = 1 and 39,, = 4. Derive their budget constraint (b) Given the price ratio is given by, pr = i , set MRS = pr, and determine the consumers consumption relation between the two goods. (0) Solve for this consumer's optimum bundle