Question Details

[solution]: hello i just need number 3 done thank you. would prefer it to be


Answer download
More Details:

hello i just need number 3 done thank you. would prefer it to be done asap




Price Theory

 

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

 

utilities are,

 

1

 

and MUy = 1.

 

MUx = ?

 

2 x

 

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)

 


 

1

 


 

 


Solution details:
STATUS
Answered
QUALITY
Approved
ANSWER RATING

This question was answered on: Dec 18, 2020

PRICE: $18.50

Solution~00031148133952.zip (25.37 KB)

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 .
SiteLock

About this Question

STATUS

Answered

QUALITY

Approved

DATE ANSWERED

Dec 18, 2020

EXPERT

Tutor

ANSWER RATING

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).
This we believe is a better way of understanding a problem and makes use of the efficiency of time of the student.

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.

Order Now