Re: Daily question

Posted by Amit Goyal on Feb 25, 2009; 9:51am
URL: http://discussion-forum.276.s1.nabble.com/Daily-question-tp2328964p2382866.html

25-28 Feb, 2009
Income consumption curve for two goods x and y has equation y=2x. What will be the income elasticities for x and y?

A's and B's demand curves for apples are given by
p=20-q (A)
p=5-q/2 (B)
Suppose there are only two consumers in the market. Market Supply function is given by: p=2+Q.
Find the equilibrium quantity and price in the market.

Laxmi is a poor agricultural worker. Her consumption basket comprises three commodities: rice and two vegetables - cabbage and potato. But there are occasionally very hard days when her income is so low that she can afford to buy only rice and no vegetables. However, there never arises a situation when she buys only vegetables and no rice. But when she can afford to buy vegetables, she buys only one vegetable, namely the one that has the lower price per kilogram on that day. Price of each vegetable fluctuates day to day while the price of rice is constant. Write down a suitable utility function that would represent Laxmi’s preference pattern. Explain your answer.

A person wants to sell his labor and spend his income entirely on the consumption of good G. His utility function is given by u= (1/2)log(G)+(3/4)log(L) where L is number of leisure hours. Maximum number of hours available in a day = 10 i.e. if he works for x hours then his leisure hours equal 10-x. Give the supply curve of labor. Assume that price of G=1.