Calculate the price elasticity of demand for good

Reference no: EM132151261

Question: Consider the following Utility Functions below:

a. U = X² + Y²

b. U = X²Y²

c. U = XY²

d. U=XY + X + Y

1. Assume the initial prices are Px = $2, Py =$4 and M = $100. Find the utility maximizing consumption bundle for each utility function.

2. Now derive the demand curve for Good X for each of the utility functions (Hint: solve the equations but do not substitute in for Px)

3. Using the demand curve for Good X derived above, calculate the price elasticity of demand for Good X at Px=$2. Note: calculate the point elasticity of demand.

Reference no: EM132151261

Questions Cloud

More innovative business strategy approaches : Reflect for moment upon traditional-more innovative business strategy approaches and paradigms to which you have been exposed in taking any business strategy.

Implements a simple calculator using python : Help formulate a program (Python script) named mycalc.py, which implements a simple calculator using python.

Write function that takes an array of doubles : Write function that takes an array of doubles and the array length as parameters (compute the array length using size of, don't just put in the number 5).

Allocation to memory management : Kindly help in comparing file allocation to memory management, paying particular attention to the similar sorts of problems than can occur in both.

Calculate the price elasticity of demand for good : Using the demand curve for Good X derived above, calculate the price elasticity of demand for Good X at Px=$2. Note: calculate the point elasticity of demand.

The average and standard deviation of x-bar : Men average 5’10” in height, with a standard deviation of 2”. If we take x-bars from groups of 10 men, what would be the average and standard deviation of x-bar

Differentiate among the styles of public leadership : For all assignments, assume that the City Manager has hired you as the Chief of Staff for your local government.

It professional organization : Considering their code of ethics, compare the mission of the following IT professional organization: ACM, IEEE, AITP, and PMI.

Derive the dynamics of capital accumulation : Consider the following variant of the OLG model in which people work in both periods of their lives. They are born and die with zero assets.

User Account

All Pages