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Consumer Demand Problem Set

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17 views1 page

Consumer Demand Problem Set

Uploaded by

yifanguo453
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Problem Set 2

Suppose that a consumer has an income m and is facing prices p1 and p2 for
goods 1 and 2.

1. Assume that when consuming a bundle (x1 , x2 ) the consumer enjoys a


1 1
utility of u(x1 , x2 ) = x14 × x24 .
a. Try to draw an indifference curve and show graphically where the solution
for the consumer will be. (10 marks)
b. Find this consumer’s uncompensated demand for goods 1 and 2 as a
function of m, p1 and p2 . (10 marks)

2. Assume that when consuming a bundle (x1 , x2 ) the consumer enjoys a


1
utility of u(x1 , x2 ) = x12 + x2 .
a. Try to draw an indifference curve and show graphically where the solution
for the consumer will be. (10 marks)
b. Assume further that m = 10 and that p1 = p2 = 1. Find this consumer’s
uncompensated demand for goods 1 and 2. (10 marks)

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