Economics Tutor Exeter – Top Economics Mentors from Exeter

Microeconomics, Macroeconomics and Econometrics tutors for Exeter University. Senior econ tutors from LSE, UCL, Kings, Cambridge, Oxford University students. Get 1-on-1 or Online Economics Tutoring lessons. BEE205 Microeconomics II, BEE206 Macroeconomics II, BEE1023 Econometrics, BEE2027 Financial Markets and Decisions. Book a free trial with our economics tutor Exeter today!

Our economics tutors are handpicked from top UK and US universities. We have prepared several students at Exeter University and Exeter Business School for coursework and exam related preparation in intermediate microeconomics, macroeconomics, microeconomics II, macroeconomics II, and econometrics coursework.

Microeconomics II – Sample questions

Todd consumes lemonades $x_l$ and Mars bars $x_m$ from the university store. Todd’s utility function is given by $U(x_l,x_m)=x_l(x_m)^2$ . Initially, Todd’s income is $y = 10$ and prices are given by $P_l = 2$ , for one unit of lemonade and $P_m = 4$ for one unit of Mars bar.

Solve for Todd’s demand functions for lemonades $(x_l)$ and Mars bars $(x_m)$ , and calculate their demand at the prices given above.
In summer the price of lemonade in the university store increases to $4$ per unit. Calculate Todd’s demand for lemonade at the new prices.
Calculate the income and substitution effect of this price change on demand for lemonade.

Income and substitution effect

Using a graph show that in case the consumer is consuming perfect complements, the change in demand due to change in price of one of the goods, will consist only of income effect and the substitution effect will be zero. Next, show using a graph, that in case of perfect substitutes, the change in demand due to change in price of one of the goods will consist only of substitution effect and income effect will be zero.
A motorbike is essentially a combination of one engine $x_e$ and two wheels, $x_w$ , and thus these two commodities are always consumed in constant proportion 1:2. James is a motorbike enthusiast.

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