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Tom has $1000/wk of income to spend on 2 goods.

U(X,Y) = 10X + 8Y

a. Derive the demand schedules for X and Y.
b. Determine the values for X and Y that maximize utility when PX = 40 and PY = 50.
c. Determine the change in demand when PX increases to 80.
d. Determine the exact amounts of the income and substitution effects for X.
e. Repeat 2.a-d when the utility function is defined as U = min(10X, 5Y)

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M971290

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