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Microeconomics

Anna Blajer-Gołębiewska M. Sc.

Exercise 11.

Consumer’s income eąuals 12 monetary units. He purchases only two goods X and Y. Prices of these goods are P_x = 2 and

also P_Y = 2. Consumers utility function is TU = yjX■¥ .

a)    Draw some of indifference curves.

b)    Find the equilibrium point (on the graph).

c)    Determine the consumption of X and Y at eąuilibrium point.

Exercise 12.

Consumer’s income eąuals £1500. The graph shows his situation in April and May.

a) Fili the gaps with appropriate words.

There are two....................................points on the graph.

In April consumer could purchase maximum.............units of X.

His maximum purchase of Y was...............

The prices for goods were: Px =..........and P_y=...........

However the consumer chose the following consumption basket: X=..........and Y=..........

Now, in May.............................................has changed.

Consumer can purchase maximum.............units of X.

His maximum purchase of Y is...............

The prices for goods are: Px =..........and Py=...........

Therefore the consumer prefers to choose the following consumption basket: X=..........and Y=

b)    Calculate the cross elasticity of demand for X and Y.

c)    Calculate the price elasticity of demand for Y.

d)    Draw consumer’s individual demand curve for good Y.

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