ECON20002 Tutorial 6.pdf - ECON20002 Tutorial 6 You may...

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ECON20002 Tutorial 6 ECON20002 Tutorial 6 You may assume prices and income are strictly positive. 1. Determine the income elasticity of demand for each of the following demand functions and determine whether the good is normal or inferior or neither. a. The demand function for x 1 you found in Tutorial 4 Q1 a) for Cobb s utility function 𝑈(? 1 , ? 2 ) = ? 1 ? ? 2 1−? b. The demand function for g you found in Tutorial 4 Q2 a) for Minnie’s utility function 𝑈(?, 𝑡) = ?𝑖?(2?, 𝑡) c. The demand function for x and the demand function for y you found in Tutorial 4 Q3 a) for Quazee with the utility function 𝑈(?, ?) = ??(?) + ? . Assume 𝑝 ? < 𝑀 . d. The demand function for x: ? = 𝑀 ? 𝑝 ? where α and β are parameters, 𝛼 > 0 2. Determine the cross-price elasticity of demand for each of the following demand functions. a. The demand function for x 1 you found in Tutorial 4 Q1 a) for Cobb s utility function 𝑈(? 1 , ? 2 ) = ? 1 ? ? 2 1−? b. The demand function for g you found in Tutorial 4 Q2 a) for Minnie’s utility function 𝑈(?, 𝑡) = ?𝑖?(2?, 𝑡) . . .

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