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e) Suppose that David's utility function were (11,12)={}? + 12 instead. Also suppose that the prices are now p = 1, p2 =
Posted: Mon Apr 18, 2022 9:19 am
by answerhappygod
- E Suppose That David S Utility Function Were 11 12 12 Instead Also Suppose That The Prices Are Now P 1 P2 1 (19.99 KiB) Viewed 19 times
e) Suppose that David's utility function were (11,12)={}? + 12 instead. Also suppose that the prices are now p = 1, p2 = 10 and his income 1 is m = 50. (i) Calculate his demand for hamburgers and pizza in this case. (11) Now suppose that the price of pizza increases to p = 15, how many hamburgers and pizza will he buy now? What is different in this case compared to sub-
question d). Explain, (iii) How much of the drop in demand for pizza is due to the substitution effect and how much is due to the income effect? Calculate this mumerically and show it on the graph.