Intermediate Microeconomics: A Modern Approach, Seventh Edition

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

View Full Document Right Arrow Icon
Econ 301 – F06 PROBLEM SET 3 - due in class on Monday October 2 Wissink 1. For changes in Px, diagrammatically show what the price consumption curve looks like for the following utility functions: u(x,y) = xy; 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 functions: u(x,y) = xy; u(x,y) = x + y; u(x,y) = min{x,y}. 3. For changes in Px, diagrammatically show the income and substitution effects ala’ Hicks for the following utility functions: u(x,y) = xy; 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) = y + bln(x). 5. Initially a consumer with money income of $100 chooses between goods x and y (there are no other goods) which have prices Px and Py both equal to $2.00. The person is buying 30 units of x and 20 units of y. a. Graph the initial equilibrium. b. Now suppose that prices change so that Px = $3.00 and Py = .50. What is the cost of the original bundle at the new set of prices? Is the original bundle affordable? c. Explain fully the consumer's final equilibrium position under the new set of prices and show it on your graph.
Image of page 1

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

View Full Document Right Arrow Icon
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