Economics 1110
Intermediate Microeconomics
Spring 2011
Homework 3: Choice and Demand
Instructors: Dror Brenner and Ryan Miller
The purpose of this homework is to: (i)derive optimal consumption bundles for di/erent preference
relations (ii) compute and graph demand functions (iii) compute and graph income and price o/er curves
(iv) compute and graph Engel curves.
1. For each of the following utility functions, prices and incomes derive the optimal bundle for the con
sumer:
a: U
(
X
1
;X
2
) =
X
2
1
X
3
2
P
1
= 4
; P
2
= 6
; M
= 200
b: U
(
X
1
;X
2
) =
X
1
+
X
1
X
2
+ 3
X
2
P
1
= 3
; P
2
= 2
; M
= 97
c: U
(
X
1
;X
2
) = min
2
X
1
;
X
2
3
±
P
1
= 4
; P
2
= 1
; M
= 50
d: U
(
X
1
;X
2
) = 6
X
1
+
X
1
=
2
2
P
1
= 3
; P
2
= 2
; M
= 154
2.
P
1
= 4
; P
2
= 1
; M
= 1000
:
U
(
X
1
;X
2
) =
X
2
1
+
X
2
2
is
U
(
X
1
;X
2
) =
X
1
=
2
1
+
X
1
=
2
2
a:
Compute the optimal consumption bundles for Bob and Mark.
b:
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This note was uploaded on 04/18/2011 for the course ECON 1110 taught by Professor Mehta during the Spring '08 term at Brown.
 Spring '08
 Mehta
 Microeconomics

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