Economics



Item Name

Show that Cobb-Douglas preferences are homothetic preferences.

Show that perfect substitutes are an example of homothetic preferences.

The income offer curve is to the Engel curve as the price offer curve is to ...?

True or false? If the demand function is x1 = −p1, then the inverse demand function is x = −1/p1.

What is the form of the inverse demand function for good 1 in the case of perfect complements?

In the preceding exercise, which bundle is preferred by the consumer, the x-bundle or the y-bundle?

In the same framework as the above question, what kind of preferences would leave the consumer just as well-off as he was in the base year, for all price changes?

When prices are (p1, p2) = (2, 1) a consumer demands (x1, x2) = (1, 2), and when prices are (q1, q2) = (1, 2) the consumer demands (y1, y2) = (2, 1). Is this behavior consistent with the model of maximizing behavior?

When prices are (p1, p2) = (1, 2) a consumer demands (x1, x2) = (1, 2), and when prices are (q1, q2) = (2, 1) the consumer demands (y1, y2) = (2, 1). Is this behavior consistent with the model of maximizing behavior?

In the case described in the preceding question, would the government be paying out more or less than it received in tax revenues?