Economics Department, Faculty of Economics and Political Science English Section, Second Year Cairo University Intermediate Microeconomics

Theory Fall 2013 Dr. Heba Nassar, Dr. Abdel-Hameed Nawar Mr. Ahmed Ragab, Ms. Nesreen Seleem Answer Key to Tutorial (6) on Chapter (6): Demand (Q1) TRUE-FALSE: 1- True 2- False 3- True 4- False 5- True 6- False 7- False 8- True 9- True 10- False 11- True 12- False 13- False 14- False

(Q2) MULTIPLE CHOICE QUESTIONS: 1- a 2- d 3- e 4- e 5- d 6- d 7- e 8- a 9- d 10- e (Q3) QUESTIONS & PROBLEMS: 1- In Cobb-Douglass function, the points of optimal choices that represent the ordinary demand are:

a) P1 price offer curve represents optimal bundles at different prices of good 1. Then we calculate the values of x1 & x2 at the given different prices. Then, we draw the price offer curve from the table, to be as follows:

P1 1 2 3

x1 6 3 2

x2 6 6 6

b) Consumer demand curve for x1 can be represented by the function: Or: And the values of x1 & P1 at the optimal bundles can be drawn as follows: P1 1 2 3 x1 6 3 2

c) The Income offer Curve represents the bundles of goods that are demanded at the different levels of income. So we calculate the values of x1 & x2 at the given different income levels. Then, we draw the income offer curve from the table, to be as follows:

m 4 6 12

x1 2 3 6

x2 2 3 6

d) Engel curve for x1 can be represented by the function: Or: And the values of x1 & m at the optimal bundles can be drawn as follows: m 4 6 12 x1 2 3 6

2- Solution steps similar to no. 1 3- In Perfect Complements function, the points of optimal choices that represent the ordinary demand are:

a) P1 price offer curve represents optimal bundles at different prices of good 1. Then we calculate the values of x1 & x2 at the given different prices. Then, we draw the price offer curve from the table, to be as follows: P1 1 2 3 x1 6 4 3 x2 6 4 3

b) Consumer demand curve for x1 can be represented by the function:

or:

And the values of x1 & P1 at the optimal bundles can be drawn as follows: P1 1 2 3 x1 6 4 3

c) The Income offer Curve represents the bundles of goods that are demanded at the different levels of income. So we calculate the values of x1 & x2 at the given different income levels. Then, we draw the income offer curve from the table, to be as follows:

m 4 6 12

x1 2 3 6

x2 2 3 6

d) Engel curve for x1 can be represented by the function:

or

And the values of x1 & m at the optimal bundles can be drawn as follows: m 4 6 12 x1 2 3 6

4- Solution steps similar to no. 3.

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