Elucidate how much should josephs income increase

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Reference no: EM1320543

Q. "Microeconomic Theory

Joseph likes roses (R) also tulips (T) equally also views them as perfect substitutes in proportion 1 to 1. The price of a rose is $4, the price of a tulip is $8 also Joseph has $40 to spend on flowers.

a) Elucidate how much of each flower will Joseph buy? (Hint: the 1st order conditions will not help; think about Illustrate what you would do in this situation.)

b) Now, Assume that the price of a rose rises to $10. Elucidate how does the consumption of Joseph change?

c) Illustrate what are the Joseph's demands for roses also tulips as a function of prices also income {PR, PT, I}? You will have three cases depending on the relationship between PR also PT."

d) Elucidate how much should Joseph's income increase to compensate for the rise in the price of roses?

 

 

Reference no: EM1320543

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