3) Oğuz has the utility function U(x1,X2) = x:*x2². (X: nuts, X2: berries). %3D a) If Oğuz has 25 units of nuts and 17 units of berries, the price of nuts is 2 and the price of berries is 1 liras,...

3) Oğuz has the utility function U(x1,X2) = x:*x2². (X: nuts, X2: berries).<br>%3D<br>a) If Oğuz has 25 units of nuts and 17 units of berries, the price of nuts is 2<br>and the price of berries is 1 liras, what would be the optimal consumption of<br>Oğuz?<br>b) Assume the prices change, so that nuts cost 1 and berries cost 3 liras. What<br>is the new demand? In this change, What is the pure substitution effect? What<br>is the income effect?<br>c) In the change calculated in part (b), what is the pure substitution effect?<br>d) In the change calculated in part (b), what is the income effect?<br>In the change calculated in part (b), what is the endowment effect?<br>

Extracted text: 3) Oğuz has the utility function U(x1,X2) = x:*x2². (X: nuts, X2: berries). %3D a) If Oğuz has 25 units of nuts and 17 units of berries, the price of nuts is 2 and the price of berries is 1 liras, what would be the optimal consumption of Oğuz? b) Assume the prices change, so that nuts cost 1 and berries cost 3 liras. What is the new demand? In this change, What is the pure substitution effect? What is the income effect? c) In the change calculated in part (b), what is the pure substitution effect? d) In the change calculated in part (b), what is the income effect? In the change calculated in part (b), what is the endowment effect?

Jun 07, 2022

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3) Oğuz has the utility function U(x1,X2) = x:*x2². (X: nuts, X2: berries). %3D a) If Oğuz has 25 units of nuts and 17 units of berries, the price of nuts is 2 and the price of berries is 1 liras,...

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