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HW_03 - Economics 11 Winter 2010 HW Assignment#023 Due...

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Economics 11, Winter 2010; HW Assignment #023 Due Thursday Jan 28, 3:15PM in Lecture 1. For the quasi-linear utility function U ( x, y ) = x + y 1 / 2 find the demand functions X ( p x , p y , M ) and Y ( p x , p y , M ) (as functions of prices and income). Be careful about corner solutions! 2. For the Cobb-Douglas utility function U ( x, y ) = xy 3 (a) Find the demand functions X ( p x , p y , M ) and Y ( p x , p y , M ) (as functions of prices and income). (b) Sketch the own price demand curve for X (i.e., demand for X as a function of its own price p x ). (c) Sketch the other price demand curve for Y (i.e., demand for Y as a function of the other price p x ). (d) Sketch the income expansion path when p x = 1 , p y = 2. You may use shortcuts but DO NOT simply plug into the formula and sketches from lecture. 3. For the CES utility function U ( x, y ) = - 1 x - 1 y (The signs are as intended. Notice that utility is negative but increases when x, y increase.) (a) Find the demand functions X ( p x , p y , M ) and Y ( p x , p y , M ) (as functions of prices and income).
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