Econ 207-2
Fall 2023
Assignment #1
The assignment is due to October 8, 2023 23:59
1.
(50 pts) What are the MRSs? Determine if there is a diminishing MRS
a. 𝑈(𝑥, 𝑦) = 3𝑥 + 𝑦
b. 𝑈(𝑥, 𝑦) = 𝑥. 𝑦
c. 𝑈(𝑥, 𝑦) = √𝑥. 𝑦
d. 𝑈(𝑥, 𝑦) = √𝑥 2 − 𝑦 2
𝑥.𝑦
e. 𝑈(𝑥, 𝑦) = 𝑥+𝑦
2. (50 pts) Consider each of
a. 𝑈(𝑥, 𝑦) = 𝑥 0.1 𝑦 0.4
b. 𝑈(𝑥, 𝑦) = min(𝛼𝑥, 𝛽𝑦)
c. 𝑈(𝑥, 𝑦) = 𝛼𝑥 + 𝛽𝑦
then calculate the following
i.
ii.
iii.
iv.
Demand curves for x and y
Indirect utility function
(Indirect) expenditure function
Show that the demand curve is homogeneous in degree zero in terms of income and prices
Upload the documents to Moodle before October 8, 2020 23:59.