58 David has a quasilinear utility function of the form U.pdf
0 likes22 views
David has a quasilinear utility function defined as u(x,y)=√x+y, with specific marginal utility functions. The document outlines the derivation of David's demand curve for x in relation to prices, confirming that demand for x is income-independent at an interior optimum, and also requires deriving the demand curve for y. It questions whether y is a normal good and examines the effects on demand for y as px increases.
1 of 1
Download to read offline
More Related Content
More from admin447081 (20)
Ad
Recently uploaded (20)
Ad
58 David has a quasilinear utility function of the form U.pdf
- 1. 5.8. David has a quasilinear utility function of the form U(x,y)= square root x+y, with associated marginal utility functions MUx=1/(2 square root x) and MUy=1. A. Derive David's demand curve for x as a function of the prices, Px and Py. Verify that the demand for x is independent of the level of income at an interior optimum. B. Derive David's demand curve for y. Is y a normal good? What happens to the demand for y as Px increases?