University:
Duke University
Course:
ECON442 | Development Economics: Theory, Evidence and Policy
Academic year:

2024
Views:

292

Pages:

1
Author:

Isabella Bolton

Question 1 Suppose u(x1,x2) = x1(x2+5) Income = m Prices: {P1, P2} Deruve x3' assuming x1,x2>0 Which of the following statements is/are correct? A) For p1>m/5, x1'=0 and x2'=m/p2 B) For p2>m/5 , x1'=m/p1 and x2'=0 C) For p2<= m/5 , x1' = (m+5p2)/2p1 and x2'=(m/2p2) -(5/2) Answer 039;s demand for goods, as illustrated by the utility function and marginal utility approach. In order to accurately determine the effects of these changes, it is important to use economic principles and mathematical techniques, as shown in the derivation and calculations above. Question 2 Suppose u(x1,x2) = x1(x2+5) Income = m Prices: {P1, P2} Deruve x3' assuming x1,x2>0 Which of the following statements is/are correct? A) For p1>m/5, x1'=0 and x2'=m/p2 B) For p2>m/5 , x1'=m/p1 and x2'=0 C) For p2<= m/5 , x1' = (m+5p2)/2p1 and x2'=(m/2p2) -(5/2) Answer 039;=(m/2P2)-(5/2). This is the correct statement as it matches our derived demand functions and partial derivatives. Therefore, option C is the correct answer. In conclusion, changes in prices and income can have a significant impact on a consumer&

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