could you help me to solve this question step by step. Thanks
Assignment 1 ? Consumer Theory
Suppose that Sally?s preferences over baskets containing
food (good x), and clothing (good
y), are described by the utility function U (x, y) = x + y. Sally?s corresponding marginal
and MUy = 1.
MUx = ?
Use Px to represent the price of food, Py to represent the price of clothing, and I to
represent Sally?s income.
Question 1: Find Sally?s food demand function, and Sally?s clothing demand function.
For the purposes of this question you should assume that I/Py ? Py /4Px . (7 Marks)
Question 2: Describe the relationship between Sally?s demand for food and,
(a) Sally?s income;
(b) the price of food;
(c) the price of clothing.
Your answers should reference the demand function that you derived in question 1, and
correctly apply the relevant terminology. You should continue to assume that I/Py ?
Py /4Px . (6 Marks)
Question 3: Now assume that I/Py < Py /4Px . Find Sally?s food demand function, and
Sally?s clothing demand function. (4 Marks)
Question 4: Suppose that the price of clothing is Py = $50 per item, and that Sally?s
income is I = $425. What are the income and substitution effects if the price of food
increases from Px1 = $5 per meal, to Px2 = $12.50 per meal? (8 Marks)
This question was answered on: Dec 18, 2020
Buy this answer for only: $18.50
This attachment is locked
We have a ready expert answer for this paper which you can use for in-depth understanding, research editing or paraphrasing. You can buy it or order for a fresh, original and plagiarism-free copy (Deadline assured. Flexible pricing. TurnItIn Report provided)
Pay using PayPal (No PayPal account Required) or your credit card . All your purchases are securely protected by .
About this QuestionSTATUS
Dec 18, 2020EXPERT
GET INSTANT HELP/h4>
We have top-notch tutors who can do your essay/homework for you at a reasonable cost and then you can simply use that essay as a template to build your own arguments.
You can also use these solutions:
- As a reference for in-depth understanding of the subject.
- As a source of ideas / reasoning for your own research (if properly referenced)
- For editing and paraphrasing (check your institution's definition of plagiarism and recommended paraphrase).
NEW ASSIGNMENT HELP?
Order New Solution. Quick Turnaround
Click on the button below in order to Order for a New, Original and High-Quality Essay Solutions. New orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.
WE GUARANTEE, THAT YOUR PAPER WILL BE WRITTEN FROM SCRATCH AND WITHIN YOUR SET DEADLINE.