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Class Exercise_ Slutsky Equation $8.73   Add to cart
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  3. London School Of Economics (LSE)
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Class Exercise_ Slutsky Equation
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  • Course
  • Managerial Economics (MG207)
  • Institution
  • London School Of Economics (LSE)

This class exercise is from W3 in MT and covers Slutsky Equation (Consumer Theory topic). All the exercises are thoroughly calculated, clearly written with good explanation and accurate solutions.

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Document information

  • April 30, 2022
  • 10
  • 2021/2022
  • Other
  • Unknown

Subjects

  • economics
  • class
  • exercise
  • solutions
  • preparation
  • revision
  • monopoly
  • oligopoly
  • supply
  • demand
  • market
  • game theory
  • costs
  • profits
  • revenues
  • graphs
  • producer theory
  • consumer theory
  • market analy

Written for

  • London School of Economics (LSE)
  • Unknown
  • Managerial Economics (MG207)
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Content preview

pi =3 the
price of good 1 decreases
,
so the relative price of Xa increases
,


so the demand for ×
,
increases as there are
perfect subs .




Bc :
Ux , -1
5×2 -_
m since p,
-

pz ,
then (✗F. ✗F) =
( 74,0 )

( F. ✗F) ( 73,0 )
'
BC :
3x ,
+
5×2 -_ m since pi <
pie ,
then ✗
=




note :




perfect substitutes
means no sub .
effect

, before after

pL=3
{ pn=5
120

|pd=4
m=



Pd -4




BC , :
Jxn +
4×1=120 BCL :
5Xn + 3×d = 120

7pn= 24
, Mpd -30 Mlp'n= 40 7pd= 30
K >
pd spend all delphinium pin pd all
hollyhocks
i

ph 1cg spend
: <
so on so on
,



mlpd -30
mlpn
'
=
40



Adelphi Adelphi
nium
nium



40
30



30

BG ka
BC ,

K,




> hollyhocks > hollyhocks
24 30 40




old commodity bundle :
( ✗ d* ,
✗ E) =

(30,0) cause we
spend all on
delphinium as it is
cheaper
price after changes { pd
4
price of delphinium does not
change
=
:
so
'
=3
pn so income needed :
m= 30×4=120

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