Let the utility derived from goods X and Y be as follows for a rational individu
ID: 1146965 • Letter: L
Question
Let the utility derived from goods X and Y be as follows for a rational individual Unit of Good TU X TUY 8 utils 15 utils 21 utils 26 utils 30 utils 33 utils 35 utils 36 utils 36 utils 5.5 utils 10.5 utils 15 utils 19 utils 22.5 utils 25.5 utils 28 utils 30 utils 31.5 utils 2 4 7 8 1. What is a 'commodity bundle' (you can assume a two-commodity world)? odity world? Be sure to identify each element. 3. Assume that the Total Utility from the above is TU TUx+ TUy. Construct the Utility Matrix and identify (i.e. draw) at least two separate indifference curves. Be sure to include the commodity bundles and the total utility Arrive at the marginal utility structure for each good individually. What is the income equation and the budget line? Be sure to draw the budget line in commodity space and identify the intercepts and slope. Find the original consumer equilibrium given: Mo-12$ : p/s 2sk: p/-1% and draw in a graph (note you will need two separate graphs of this to be placed at the "top"). Be sure to identify the consumer equilibrium commodity bindle and the maximum utility. What is the algebraic condition for Consumer Equilibrium? Let the income change such that it falls to M-85. Find the new consumer equilibrium, draw this in one of the original graphs, and under that draw the Engel curve. Is X a normal or inferior good? How do we know this? Write the formula and identify the value of the income elasticity of demand. Let the own-price change such that it falls to p,'= 1%. Find the new consumer equilibrium, draw this in one of the original graphs, and under that draw the demand curve. Is X an ordinary or Giffen good? How do we know this? Write the formula and identify the value of the own-price elasticity of demand. 4. 5. 6. 7. 8, Let the Cobb-Douglas utility function take the following form: U = f(X:Y) = AX"Y(1-a) 9, Let A = 100 and = ½. Find the MRS 10. Find the original consumer equilibrium using the budget line in #6 above and draw in a graph. 11. Find the new consumer equilibrium using the budget line in #8 above and draw in the same graph. 12. Draw the demand curve under the graph. Write the formula and identify the value of the own-price elasticity of demand.Explanation / Answer
As per Chegg guidelines, first question is answered below
1.
Commodity bundle, in a two commodity world refers to denoting one unit of collection of complete set of goods produced and sold in the market. It is used to track entire inflation growth in the market denoting the two goods as one good.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.