PS4 SP090

PS4 SP090 - 100A: Intermediate Microeconomics, Dr. Famulari...

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100A: Intermediate Microeconomics, Dr. Famulari Problem Set 4 Question 1: Consider the expenditure minimization problem subject to achieving a given level of utility 5 . 1 5 . 0 8 y x U = A. Are the commodities x and y goods? Prove your answer. What does this imply about the indifference curves for U? B. Do the indifference curves for this utility function exhibit diminishing MRS? Prove your answer. C. Illustrate the consumer’s problem. Be sure to identify what you are solving for and what you know. D. Write down the first order conditions for this constrained optimization problem . E. Solve for the optimal consumption bundle, X C and Y C , as a function of x p , y p , and U . F. Solve for minimum expenditures as a function of x p , y p , and U OK, now you will need to get a calculator. Let Px=\$2.50 and Py=\$3.33 and U =432 . G. What are the numerical values of X C , Y C and E? Put these values on your graph. H.

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PS4 SP090 - 100A: Intermediate Microeconomics, Dr. Famulari...

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