When prices are p1 p2 12 the consumer demands x1 x2 12


1. When prices are (P1, P2)= (1,2), the consumer demands (X1, X2) = (1,2). When prices are (Q1, Q2) = (2,1), the consumer demands (Y1, Y2) = (2,1). Is this consumer behaviour consistent with Weak Axiom of revealed preference ?

2. Prove that elasticity of demand is not constant along a linear demand curve.

3. Prove that expenditure share weighted sum of income elasticities equal 1.

4. Prove that both goods cannot be superior or inferior at the same time.

5. Relate elasticity of demand with different slopes of the demand curve.

6. The equation to the Engel's curve of a commodity is X = 50+2M2. Calculate the income elasticity of demand at M=$100. What can you infer about the nature of the commodity.

7. Calculate the own price elasticity of demand for the demand curve P= 15-3X at prices and compare the outcomes.

a) P=0

b) P=1/8

c) P=3

d) P=15 

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Business Economics: When prices are p1 p2 12 the consumer demands x1 x2 12
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