As is true for all of us, Lisa has many weekly expenses. What might be less common is thefact that Lisa likes to buy broccoli (qB) and carrots (qc) for all the money left after herrequired expenses. Lisa's utility function is standard Cobb-Douglas, U(qB¹9c) =q³qc7.0.31. Before we specify what Lisa's "disposable" income is and what the price of a head ofbroccoli and a small bag of carrots are, please derive expressions for the demand forbroccoli and carrots (that is, derive demand for the two goods as functions of Y, PB,and pc). In other words, find the following demand functions: qB = f(Y,PB, Pc) andqc = f(Y,PB, Pc).Use the substitution method for one good and the short-cut for the other good.2. Using the demand functions that you derived in question 1, please find Lisa's optimalconsumption of broccoli and carrots (the quantity demanded, if you will) if Y = 10,PB = 0.60, and Pc = 1.00.3. Draw the (inverse) demand curve for broccoli and indicate Lisa's consumption ofbroccoli. To do this you need to pick at least one other price of broccoli, I suggestchoosing PB = 0.30.Next assume that Lisa's weekly required expenses are reduced so that she now is able tospend 20 (Y = 20) on broccoli and carrots.4. In your previous demand diagram, please draw a new demand curve and describewhat happened. That is, find the new demand curve for the two prices of broccoli,PB = 0.60 and PB = 0.30, but with a new income (budget) level.Use the short-cut for this question.5. Finally, derive Lisa's Engel curve for broccoli. For this question, suppose that the priceof broccoli is PB = 0.60.NOTE: The Engel curve shows a relationship between quantity demanded of a singlegood and income, holding prices constant. To draw the Engel curve, we plot income(Y - on the vertical axis) against quantity demanded (qB - on the horizontal axis).6. For fun (extra and if time permits): find the income elasticity of demand for broccoliat the initial consumption point (when Y = 10). Also, is broccoli a normal good (or isit an inferior good, as some children claim)?HINT: Income elasticity of demand = Ey =%4 in qB%Δ in YdqB YdY qB

Lisa has two goods available to consume : Broccoli (qb) & Carrots (qc ).Utility function : U(qb…

As is true for all of us, Lisa has many weekly expenses. What might be less common is the fact that Lisa likes to buy broccoli (qB) and carrots (qc) for all the money left after her required expenses. Lisa's utility function is standard Cobb-Douglas, U(qB, qc) = 98³9c7. ,0.3 1. Before we specify what Lisa's "disposable" income is and what the price of a head of broccoli and a small bag of carrots are, please derive expressions for the demand for broccoli and carrots (that is, derive demand for the two goods as functions of Y, PB, and pc). In other words, find the following demand functions: qB = f(Y, PB, Pc) and qc = f(Y,PB, PC). Use the substitution method for one good and the short-cut for the other good. 2. Using the demand functions that you derived in question 1, please find Lisa's optimal consumption of broccoli and carrots (the quantity demanded, if you will) if Y = 10, 0.60 and 1.00

As is true for all of us, Lisa has many weekly expenses. What might be less common is the fact that Lisa likes to buy broccoli (qB) and carrots (qc) for all the money left after her required expenses. Lisa's utility function is standard Cobb-Douglas, U(qB, qc) = 98³9c7. ,0.3 1. Before we specify what Lisa's "disposable" income is and what the price of a head of broccoli and a small bag of carrots are, please derive expressions for the demand for broccoli and carrots (that is, derive demand for the two goods as functions of Y, PB, and pc). In other words, find the following demand functions: qB = f(Y, PB, Pc) and qc = f(Y,PB, PC). Use the substitution method for one good and the short-cut for the other good. 2. Using the demand functions that you derived in question 1, please find Lisa's optimal consumption of broccoli and carrots (the quantity demanded, if you will) if Y = 10, 0.60 and 1.00

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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