Derive and compare demand curve
Course:- Macroeconomics
Reference No.:- EM1322

Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Macroeconomics

a) Johnny consumes peanuts (x1) and a composite good (x2). His utility function is U = x1x2. His marginal utilities are MU1 = x2 and MU2 = x1. Johnny's budget is $20 and the price of the composite good is $1. Derive Johnny's demand function for peanuts.

b) Ambrose consumes peanuts (x1) and a composite good (x2).He has a utility functionU = 4 x1 + x2. This means his MU1 = 2/√x1 and his MU2 = 1 . The price of the composite good is p2 = 1. His budget is $20 per month. Derive Ambrose's demand function for peanuts. How does it compare with Johnny's demand curve for peanuts?

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Macroeconomics) Materials
(Elasticity and Total Revenue) Explain the relationship between the price elasticity of demand and total revenue. (Determinants of Price Elasticity) Would the price elasticit
How do politicalparties and congressional leaders change a legislator's ability to be responsive to his or her district's median voter? How mightthis affect the legislator's
"Behavioral bias is emotional bias and its not correct pure rational behavioral is process of economic decision making today i will decide as per economic condition not as p
GDP is $15 trillion. Consumption is $10 trillion, and government spending is $2.5 trillion. Taxes are $1 trillion, and the net capital inflow is $0.5 trillion. Investment is _
Case Situation: You are a senior member of an international risk management firm. An important and long standing client with significant operations in the UK, EU and North A
The insurance company informs her that she has two options: (1) she can receive the entire $500,000 in one lump-sum payment or (2) she can receive annual installments of $58,0
How has Donald Trump's 2016 presidential campaign been so successful? Despite all the negative media attention he has gotten for his controversial remarks, he was still able
In a short run situation in which quantity demanded equals quantity supplied in a competitive industry, with price greater than the average cost of the typical firm,