problem3 301 f06

# Intermediate Microeconomics: A Modern Approach, Seventh Edition

• Homework Help
• PresidentHackerCaribou10582
• 2

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

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.

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

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

{[ snackBarMessage ]}

### What students are saying

• 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.

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

• 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.

Dana University of Pennsylvania ‘17, Course Hero Intern

• 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.

Jill Tulane University ‘16, Course Hero Intern