Find the marshallian demands using given information

Reference no: EM132207772

Question: Jane's utility function has the following form:

U(x,y) = 3x2 + xy

The prices of r and y are p and py respectively. Jane's income is I.

(a) Find the Marshallian demands for x and y and the indirect utility function when px > 6py. (This condition is required to make sure that there is no corner solution. You can therefore ignore corner solutions.)

(b) Without solving the cost minimization problem, recover the Hicksian demands for x and y and the expenditure function from the Marshallian demands and the indirect utility function when px > 6py. (This condition is required to make sure that there is no corner solution. You can therefore ignore corner solutions.)

(c) Write down the Slutsky equation determining the effect of a change in px on the demand of x. (No need to use results in the previous parts.) Indicate which compo- nent represents the total price effect, which component represents the substitution effect, and which component represents the income effect.

(d) Now assume that px = 10, py = 1, and I = 49. Using the Slutsky equation from part (c) compute the total, substitution, and income effect of a change in px on the demand of x when px > 6py. (You can ignore the possibility of a corner solution).

Reference no: EM132207772

Questions Cloud

What is the probability that the first stack was selected : The 3 cards are found to be red. Having this information revealed to you, what is the probability that the first stack was selected?

How accuracy of forecasting mother is evaluated : Briefly describe how accuracy of forecasting mother is evaluated, and which method provides a superior forecast? The response must be typed.

What is the empirical relevance of the h-o theory : What is the empirical relevance of the H-O theory and the new trade theories? What is the relationship between transportation costs and nontraded goods

Display the message few are positives : Display on the screen the message Most numbers are Positive if more than 5 numbers are Positives and find the multiplication.

Find the marshallian demands using given information : Find the Marshallian demands for x and y and the indirect utility function when px > 6py. (This condition is required to make sure that there is no corner.

Calculate the present value of the interest payments : FIN 3150 Assignment - Valuing a leveraged firm. Calculate the present value of the interest payments. Determine the value of the tax shield of interest

Write a program that allows the user to specify a filename : Write a program that allows the user to specify a filename on the command line. If the filename is not specified, the program prompts the user for the filename.

How many terms are needed for the approximation to return : Now have your modified program round responses to 2 decimal places. How many terms are needed for the approximation to return a result of 0.99 or greater?

Case is assigned to administrative law judge : Your case is assigned to an administrative law judge (ALJ). Prepare a document summarizing the case you will submit to the ALJ.

User Account

All Pages