P R I C E T H E O R Y 价格理论 assignment 代写

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P R I C E T H E O R Y 价格理论 assignment 代写

P R I C E T H E O R Y

A S S I G N M E N T 1

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P y

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P R I C E T H E O R Y 价格理论 assignment 代写

I N S T R U C T I O N S & Q U E S T I O N S

Assignment Instructions

Prepare your assignment in accordance with the following instructions:

1. Answer all questions.

2. Show all working.

3. All answers and equations must be typed.

4. All graphs must be computer generated.

5. Your assignment must be your own work.

6. Submit your assignment through Turnitin.

Following the submission of your assignment:

7. Check that you received a Turnitin receipt at your RMIT student email address. If

you have not received a Turnitin receipt then your assignment was NOT successfully

submitted. If you do not successfully submit your assignment, you will receive a

grade of zero.

8. Review your assignment on Turnitin to ensure that you have uploaded the correct

file, and that your file appears as you intend.

9. Retain your email receipt as proof of a successful submission.

Failure to follow these instructions will result in the loss of marks.

In accordance with RMIT University policy, late assignments will be penalised 10%

per day, or part thereof. Assignments that are more than ten (10) days late will not

be marked. Note: The timestamp on your assignment will be the time at which you

successfully complete the Turnitin submission process.

There are a total of twenty (20) marks available on this assignment. This assignment

contributes 25% of your final grade.

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Assignment Questions

Suppose that Sally’s preferences over baskets containing coffee (good x), and milk (good

y), are described by the utility function U(x,y) = 40 √ x+y. Sally’s corresponding marginal

utilities are,

MU x =

20

√ x and MU y = 1.

The price of coffee is P x = $4 per cup, and the price of milk is P y = $1 per litre. Sally’s

income is I = $200.

Question 1: Without deriving the optimal consumption basket, show that the basket with

x = 25 cups of coffee, and y = 50 litres of milk, is NOT optimal. (3 Marks)

Question 2: Derive the expression for Sally’s marginal rate of substitution. (1 Mark)

Question 3: Find Sally’s optimal consumption basket. (3 Marks)

Question 4: Find Sally’s new optimal consumption basket if the price of coffee increases

to P x = $5 per cup. (3 Marks)

Question 5: Is coffee a Giffen good for Sally? Briefly explain. Your answer must reference

the consumption baskets you found in questions 3 and 4. (3 Marks)

Question 6: Find the income and substitution effects associated with an increase in the

price of coffee from $4 to $5 a cup. (4 Marks)

Question 7: Describe the relationship between Sally’s demand for coffee and her income.

Your answers must reference the your previous answers, AND use the correct term to

describe the relationship. (3 Marks)

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P R I C E T H E O R Y 价格理论 assignment 代写