Reference no: EM131857783
May I ask please a help with the following questions:
1. When prices are (p1, p2) = (1, 2) a consumer demands (x1, x2) = (1, 2), and when prices are (q1, q2) = (2, 1) the consumer demands (y1, y2) = (2, 1). Is this behavior consistent with the model of maximizing behavior? 2. When prices are (p1, p2) = (2, 1) a consumer demands (x1, x2) = (1, 2), and when prices are (q1, q2) = (1, 2) the consumer demands (y1, y2) = (2, 1). Is this behavior consistent with the model of maximizing behavior? 3. In the preceding exercise, which bundle is preferred by the consumer, the x-bundle or the y-bundle? 4. We saw that the Social Security adjustment for changing prices would typically make recipients at least as well-off as they were at the base year. What kind of price changes would leave them just as well-off, no matter what kind of preferences they had? 5. In the same framework as the above question, what kind of preferences would leave the consumer just as well-off as he was in the base year, for all price changes?6.True or false? If the demand function is x1 = -p1, then the inverse demand function is x = -1/p1.
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