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1. Clara's utility function is a) Write an equation for Clara's indifference curve that goes through the point (X,Y)=(2,8). b) Suppose that the price of each good is one and that Clara has an income of 11. Write an equation that describes her budget constraint. c) Find an equation the describes Clara's MRS for any given commodity bundle (X,Y). d) Use the equations in parts b) and c) to solve for Clara's optimal bundle( Hint use the fact that at Clara's optimal choice. = MRS) e) Find Clara's demand function for good X (i.e. find X(Px, Py, M).

1. Clara's utility function is a) Write an equation for Clara's indifference curve that goes through the point (X,Y)=(2,8). b) Suppose that the price of each good is one and that Clara has an income of 11. Write an equation that describes her budget constraint. c) Find an equation the describes Clara's MRS for any given commodity bundle (X,Y). d) Use the equations in parts b) and c) to solve for Clara's optimal bundle( Hint use the fact that at Clara's optimal choice. = MRS) e) Find Clara's demand function for good X (i.e. find X(Px, Py, M).

Microeconomic Theory
Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter3: Preferences And Utility
Section: Chapter Questions
Problem 3.7P
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Only part a b c and d to be answered... 

1. Clara's utility function is U(X,Y)-(X+2)(Y +1). a) Write an equation for Clara's indifference curve that goes through the point (X,Y)=(2, 8). b) Suppose that the price of each good is one and that Clara has an income of 11. Write an equation that describes her budget constraint. c) Find an equation the describes Clara's MRS for any given commodity bundle (X,Y). d) Use the equations in parts b) and c) to solve for Clara's optimal bundle( Hint use the fact that at Clara's optimal choice = MRS) e) Find Clara's demand function for good X (i.e. find X(Px, Py, M).
Transcribed Image Text:1. Clara's utility function is U(X,Y)-(X+2)(Y +1). a) Write an equation for Clara's indifference curve that goes through the point (X,Y)=(2, 8). b) Suppose that the price of each good is one and that Clara has an income of 11. Write an equation that describes her budget constraint. c) Find an equation the describes Clara's MRS for any given commodity bundle (X,Y). d) Use the equations in parts b) and c) to solve for Clara's optimal bundle( Hint use the fact that at Clara's optimal choice = MRS) e) Find Clara's demand function for good X (i.e. find X(Px, Py, M).
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