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Assume that there are two types of consumers. In particular, consumers of type 1 has utility function u(x, y) = x0.5 y0.5, whereas consumer of type 2 has u(x, y) = x0.3 y0.7. Both of them have income given by I>0, and the prices denoted are by PX and PY, as usual.
a) Find the Marshallian demands of x for both types of consumers.
b) In what follows, suppose that there are 50 consumers of type 1 and 100 of type 2. Find the market demand of x. Does the price of y affect this demand?
c) Now suppose that I= 2 and that the market supply of X is given by QS = 55 + 55PX. Compute the short-run equilibrium price and its corresponding quantity.
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Because you are working together as a team, it is seen by the ownership that if one is successful, you are all successful. Likewise, if one fails, you all fail. The future success of the company is dependent on your mutual success.
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