HW04 - Economics 11 Winter 2006 Homework#4 Due Thursday...

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Unformatted text preview: Economics 11, Winter 2006 Homework #4 Due Thursday February 10, 3PM. 1. For the following Cobb-Douglas utility functions, find the optimal choice of good x as a function of its price p x (that is, the demand function ) when p y = 100 and I = 5000: (a) u ( x,y ) = x 1 / 3 y 2 / 3 (b) v ( x,y ) = x 2 / 3 y 1 / 3 On one diagram, sketch both demand functions (demand for x as a function of its price p x ). Explain the difference. 2. For the following quasi-linear utility functions, find the optimal choice of x as a function of p y when p x = 1 ,I = 50: (a) u ( x,y ) = x + log y (b) u ( x,y ) = x- 1 y (log means the natural logarithm.) Be careful about the possibility of corner solutions! On one diagram, sketch both other price demand functions (demand for x as a function of p y ). 3. For the CES utility function u ( x,y ) = x 1 / 4 + y 1 / 4 , find the optimal choice of good x as a function of income I and prices p x ,p y . (The answer is a little messy.) 4. When p x = 20 and I = 500, my demand function for...
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HW04 - Economics 11 Winter 2006 Homework#4 Due Thursday...

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