Intermediate Microeconomics: A Modern Approach, Seventh Edition

Info icon This preview shows pages 1–2. Sign up to view the full content.

Econ 301 – F07 PROBLEM SET 3 - due in class on Tuesday Oct 2 Wissink 1. For changes in Py, diagrammatically show what the price consumption curve looks like for the following utility functions: u(x,y) = y + v(x); u(x,y) = x 2 y 2 ; u(x,y) = x + y; u(x,y) = min{x,y}. 2. For changes in I, diagrammatically show what the income consumption curve looks like for the following utility function: u(x,y) = y + v(x). 3. For changes in Px, diagrammatically show the income and substitution effects ala’ Slutsky for the following utility functions: u(x,y) = x 2 y 2 ; u(x,y) = x + y; u(x,y) = min{x,y}. 4. Derive the demand functions for x & y for the utility function: u(x,y) = 2X + 3Y 5. Remember… James Bond’s favorite drink is a Vodka Martini, shaken, not stirred. His personal perfect recipe is to always use 1 part vodka to 3 parts gin. If martinis are the only thing James consumes, and we measure parts as ounces (oz) then what is the solution to James’s constrained utility maximization exercise assuming that P V = $6 per oz, P G = $8 per oz and that James’s income for drinking tonight is $70?
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern