Posted by **Anonymous** on Friday, February 21, 2014 at 8:29pm.

1.. Suppose that U(x; y) = min(x; y) with px = 1 and py = 1. Describe and

illustrate the income and substitution effects of an increase in the price of

good y. What does this imply about a tax imposed on good y..

2.. Let U(x; y) = 5x:8y:2 showing all derivation work, find:

(a) the Marshallian demand functions for x and y

(b) the Indirect Utility Function

(c) the compensated demand functions xc and yc

3….. Suppose that Timmy just graduated from college and has two job offers in two distinct

cities. Timmy gains utility from only the consumption of goods x and y and has a utility

function U(x; y) = . In City A, Timmy would earn $50 and the prices of x and

y are $42 and $12, respectively. In City B, Timmy would earn $40 and the prices of x

and y are $32 and $8, respectively. Will Timmy take the job in City A or City B and

how much utility would he gain in each city

- economics -
**Anonymous**, Sunday, February 23, 2014 at 9:20pm
none of the above

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