Econ 302. 1) For the following utility functions find the optimal demands functions
for good 1 and good 2. Provide a plot of the demand functions. Then plot the ...
Homework 2 Econ 302 1) For the following utility functions find the optimal demands functions for good 1 and good 2. Provide a plot of the demand functions. Then plot the income offer curves, the corresponding Engel curves for both goods and the demand offer curves. Which of the following utility functions represent homothetic preferences and why? Are the underlying goods ordinary or Giffen? Are they normal or inferior? min 2 , 3 , a) max , , b) c) 2 , 5 d) , 5 , 6 9 e) f) , , g) 2) For the following exercises suppose that the initial prices and income are: 2, 3 , 10. The price next to the utility functions represents the price that has changed and its new value. Find the optimal demand functions and for the given changes in prices compute the SE and the IE. Find the total effect. Use the Slutsky equation to determine whether the underlying goods are ordinary or Giffen. min , , , ′ 1 a) b) min , , , ′ 4 , , ′ 4 c) d) , 2 , ′ 2 4 , 4 4 , , ′ 2 e)
