Essay
Brad lives in a two good world consisting of x and y. Brad has a budget of B = 120 and an endowment of good x
equal to 90 units. Brad can either buy or sell good x in a common market for the price px. The price of y is 1.
Brad's utility function is of the form U(x,y)= xy
a)Write down Brad's budget constraint.
b)Find expressions for Brad's demand functions for x and y.
c)At what values of px is Brad a net buyer of good x , at what values is he a net seller, and at what price does Brad's demand for x just equal his endowment?
Correct Answer:
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a)pxx + pyy = 120 + 90px
b)x = (1...View Answer
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Correct Answer:
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b)x = (1...
View Answer
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