QUESTION 1 The optimal amount of x1, x2, P1, P2 and income are given by the following: 41 21 X1- X₂6P₂ 6P₁ The original

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Question 1 The Optimal Amount Of X1 X2 P1 P2 And Income Are Given By The Following 41 21 X1 X 6p 6p The Original 1 (31.2 KiB) Viewed 23 times

QUESTION 1 The optimal amount of x1, x2, P1, P2 and income are given by the following: 41 21 X1- X₂6P₂ 6P₁ The original prices are: P1-21 P2=85 The original income is: 1=6022 The new price of P₁ is the following: P₁-84 Assume that the price of x₁ has changed from P₁ to P₁'. What is the substitution effect? QUESTION 2 Belfast Company produces bicycles using labor (L) and capital (K). Its production function is given by the following expression: Q=118 L +39 K where Q is the output of bicycles. The prices of labor (PL), capital (PK), bicycle (P) and the cost (C) are the following: PL=127, PK-50, P=74, and C=1946 What is the MRTS?