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Questions › JNU › JNU SIS 2015 › Q28
2 marks, −1Microeconomics › Demand theory and elasticity › Hicksian demand, the expenditure function and dualityHardabout 2 min

JNU SIS 2015 Question 28: Demand theory and elasticity

Anand consumes two goods, XXX and YYY. His utility function is U=X2YU = X^2YU=X2Y. The price of XXX is 1 and the price of YYY is 2, while Anand's income is 100. Now, let the price of YYY fall to 1, while the price of XXX and income stay constant. Anand is exactly as well off (in utility terms) after the price change as he was before it if he chooses

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Anand consumes two goods, X and Y. His utility function is U = X²Y. The price of X is 1 and the price of Y is 2, while Anand's income is 100. Now, let the price of Y fall to 1, while the price of X and income stay constant. Anand is exactly as well off (in utility terms) after the price change as he was before it if he chooses (A) X = 200/3, Y = 100/3 (B) X = 2(500000)^(1/3)/3, Y = (500000)^(1/3)/3 (C) X = 100/3, Y = 200/3 (D) X = (500000)^(1/3)/3, Y = 2(500000)^(1/3)/3

Also written as: Anand consumes two goods, X and Y. His utility function is U = X^2Y. The price of X is 1 and the price of Y is 2, while Anand's income is 100. Now, let the price of Y fall to 1, while the price of X and income stay constant. Anand is exactly as well off (in utility terms) after the price change as he was before it if he chooses

Demand theory and elasticity has come up 161 times in 7 exams since 2004.

What this question tests

This question is on Hicksian demand, the expenditure function and duality, part of Demand theory and elasticity in Microeconomics.

Compensated demand, the expenditure and indirect utility functions, and the links between them.

TestStop has 9 past-paper questions on this subtopic.

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