Economics 11: Problem Set 7 Fall 2025 UCLA

Economics 11: Problem Set 7
Fall 2025
Maurizio Mazzocco


This is a practice problem set and, therefore, won’t be turned in or graded.




Problem 1
Ralph consumes apples (A) and bananas (B). His Marshallian demand for bananas is

I 0.4 p0.2
B ∗ (pA , pB , I) = A
0.6
3pB

.

(a) Find the income elasticity of demand for bananas (eB,I ) and interpret the value. Are
bananas an inferior or normal good?

(b) Find the own price elasticity of demand for bananas (eB,pB ) and interpret the value.
Does the own price elasticity of demand for bananas depend on the value of pB ?

(c) Find the cross price elasticity of demand for bananas (eB,pA ) and interpret the value.
Are bananas and apples gross substitutes or gross complements?


Problem 2
Suppose a firm uses capital K and labor L to produce output Q with the following pro-
duction function:

1
Q(K, L) = 3KL + L2
6

(a) Find the marginal product of capital and marginal product of labor.


1