Problem_Set__2_-_demand_and_utility

Problem_Set__2_-_demand_and_utility - Econ 701...

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Econ 701 – Microeconomic Theory – Problem Set #2 Consumer Utility and Demand Functions – Review Problems Notes: This problem set is designed to give you a little bit of practice in computing derivatives and solving some simple optimization problems. For reference material, see chapters 2 and 3 of Nicholson. Consider the following utility functions. Using a budget constraint of the form - y p x p I y x + = , find the demand for goods x and y . 1. 3 2 ) , ( y x y x u = 2. ) 3 )( 2 ( ) , ( - - = y x y x u 3. y x y x u ln 3 ln 2 ) , ( + = 4. y x y x u 3 2 ) , ( = 5. 2 1 2 1 ) , ( y x y x u + = 6. Find the indirect utility function associated with the utility function in 1) above. 7. Find the indirect utility function associated with the utility function in 5) above. 8. If you have done the problems correctly (and I have set them up correctly), your answers for 1), 3) and 4) should be identical. Explain in words why this is the case (Hint: are these functions somehow related? How so?) Can you think of yet another
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Problem_Set__2_-_demand_and_utility - Econ 701...

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