Author Question: Show that the utility functions V(X,Y) = XaY1-a and U(X,Y) = a ln(X) + (1-a)ln(Y) represent the same ... (Read 21 times)

naturalchemist

  • Hero Member
  • *****
  • Posts: 542
Show that the utility functions V(X,Y) = XaY1-a and U(X,Y) = a ln(X) + (1-a)ln(Y) represent the same ordering of bundles.
 
  What will be an ideal response?

Question 2

A specific tax in a monopoly market equal to the marginal harm of pollution
 
  A) will increase welfare.
  B) will decrease welfare.
  C) will leave welfare unchanged.
  D) All of the above are possible.



macagnavarro

  • Sr. Member
  • ****
  • Posts: 334
Answer to Question 1

ln(V(X,Y)) = ln(XaY1-a) = ln(Xa) + ln(Y1-a) = U(X,Y)
Because ln(x) is a monotonic increasing function, the preference ordering is preserved.

Answer to Question 2

D



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Medication errors are three times higher among children and infants than with adults.

Did you know?

Most fungi that pathogenically affect humans live in soil. If a person is not healthy, has an open wound, or is immunocompromised, a fungal infection can be very aggressive.

Did you know?

More than nineteen million Americans carry the factor V gene that causes blood clots, pulmonary embolism, and heart disease.

Did you know?

On average, someone in the United States has a stroke about every 40 seconds. This is about 795,000 people per year.

Did you know?

Pink eye is a term that refers to conjunctivitis, which is inflammation of the thin, clear membrane (conjunctiva) over the white part of the eye (sclera). It may be triggered by a virus, bacteria, or foreign body in the eye. Antibiotic eye drops alleviate bacterial conjunctivitis, and antihistamine allergy pills or eye drops help control allergic conjunctivitis symptoms.

For a complete list of videos, visit our video library