ECON 3710 Study Guide - Midterm Guide: Hicksian Demand Function, Marshallian Demand Function, Expenditure Function
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This assignment is worth 20% of your final mark. Answer all questions and show how you obtained your answers. You have 80 minutes: jessica has the utility function: Let i > 0, px > 0, and py > 0 be her income, the price of x, and the price of y respectively. (i) (ii) (iii) (iv) Derive her marshallian demand functions for x and y. Using her marshallian demand function of x, determine whether x and y are substitutes or complements. Suppose that the price of x increases by 50% and the price of y increases by 20%. Px and py always satisfy px = 2py, find the percentage increase in the minimum expenditure required to attain the same level of utility (i. e. , her utility before the increase in the prices). 10 marks: mr. ramovich is an investor whose utility function is. He is considering investing an amount s = kw out of his wealth w in the shares of.
