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e3101a2 - Intermediate Microeconomics(Econ 3101 Assignment...

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Unformatted text preview: Intermediate Microeconomics (Econ 3101) Assignment 2 Due Monday, 29 June 2009, 10:00 am . Students are welcome to discuss homework in groups, but each student must prepare and submit a unique assignment and note the names of other group members. All assignments must be neat and professional. Answer all parts of all questions. 1. Suppose a consumer’s preferences are represented by the utility function u ( x,y ) = min { x, 2 y } . The price for good x is p x , the price for good y is p y , and the consumer has m to spend. (a) Derive the consumer’s demand for good x as a function of p x , p y , and m . (b) Calculate the consumer’s optimal consumption bundle if p x = 3, p y = 4, and m = 600. (c) Graph the Engel Curve for prices p x = 3 and p y = 4. 2. The Stone-Geary utility function, u ( x 1 ,x 2 ) = ( x 1- γ 1 ) β 1 ( x 2- γ 2 ) β 2 , is an important generalization of the Cobb-Douglas Utility Function. Consider the special case where β 1 = 1, β 2 = 1, γ 1 > 0, and γ 2 > 0. The price for good0....
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e3101a2 - Intermediate Microeconomics(Econ 3101 Assignment...

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