Business, 14.02.2020 04:24 jacycooley

Suppose we have a market with 200 individuals with preferences over two goods, x and y.
Consider that all 200 individuals have the utility function U=x2/3y1/3 and that each individual has the same income and is subject to the same prices. Calculate the market demand for x as a function of income and prices.
Find the own price elasticity of demand for good x. Is the elasticity constant or is it changing at different values of Px?
a. Suppose now that we know m=180,Px=4, and Py=2. What is the market demand for x? This should be a number.
b. Consider now that 100 individuals (type A) have the utility function U=x1/3y2/3 and the other 100 (type B)have the utility function U=x2/3y1/3. Each individual still has the same income and is subject to the same prices. Calculate the market demand for x as a function of income and prices.
c. Suppose now that we know m=180,Px=4, and Py=2. What is the market demand for x? This should be a number.

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Suppose we have a market with 200 individuals with preferences over two goods, x and y.
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