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Derive the function that describes the demand

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Reference no: EM132473114

For the utility function U(x,y) = X.3Y.6 find the utility maximizing quantities of X and Y

  1. Subject to the constraint that total combined expenditure (budget) for X and Y must not exceed $1,000, PX = $5 and PY = $2.
  2. If the expenditure budget is increased to $2,000, what are the new optimum quantities? 
  3. Calculate the budget elasticity of demand for X.  For Y.
  4. If price of X falls to $4, with the budget constraint now $2.000 what will be the revised utility maximizing quantities? 
  5. If the budget constraint had remained at $1,000, what would be the revised optimum consumption pattern if Price of X falls from $5 to $4.
  6. Derive the function that describes the demand for X as a function of the prices of X and Y and of income (budget) B.

Reference no: EM132473114

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