1. Problems 5.1 Thirsty Ed drinks only pure spring water, but he can purchase it in two different-sized containers: 0.75 liter and 2 liter. Because the water itself is identical, he regards these two "goods" as perfect substitutes. Let a represent the quantity of 0.75-liter containers and y represent the quantity of 2-liter containers. Assume Ed's utility is equal to the total quantity of water consumed and that the containers themselves yield no utility. Which of the following functions best represents Ed's utility? OU= min(0.75x, 2y) OU = x0.75+ y² OU = 20.752 OU=0.75x + 2y I 0.75 When then the demand function for a is x*= Px and the demand function for y is y* - Px Py I I 0.75 When then the demand function for æ is x*= Py and the demand function for y is y*= Py+Px Px Py 0 The following graph shows the demand function for æ, holding I and py. I Py I Px

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter4: Utility Maximization And Choice
Section: Chapter Questions
Problem 4.5P
Question
None
1. Problems 5.1
Thirsty Ed drinks only pure spring water, but he can purchase it in two different-sized containers: 0.75 liter and 2 liter. Because the water itself is
identical, he regards these two "goods" as perfect substitutes.
Let a represent the quantity of 0.75-liter containers and y represent the quantity of 2-liter containers. Assume Ed's utility is equal to the total quantity
of water consumed and that the containers themselves yield no utility.
Which of the following functions best represents Ed's utility?
OU= min(0.75x, 2y)
OU = x0.75+ y²
OU = 20.752
OU=0.75x + 2y
I
0.75
When
then the demand function for a is x*=
Px
and the demand function for y is y* -
Px
Py
I
I
0.75
When
then the demand function for æ is x*=
Py
and the demand function for y is y*=
Py+Px
Px
Py
0
The following graph shows the demand function for æ, holding I and py.
I
Py
I
Px
Transcribed Image Text:1. Problems 5.1 Thirsty Ed drinks only pure spring water, but he can purchase it in two different-sized containers: 0.75 liter and 2 liter. Because the water itself is identical, he regards these two "goods" as perfect substitutes. Let a represent the quantity of 0.75-liter containers and y represent the quantity of 2-liter containers. Assume Ed's utility is equal to the total quantity of water consumed and that the containers themselves yield no utility. Which of the following functions best represents Ed's utility? OU= min(0.75x, 2y) OU = x0.75+ y² OU = 20.752 OU=0.75x + 2y I 0.75 When then the demand function for a is x*= Px and the demand function for y is y* - Px Py I I 0.75 When then the demand function for æ is x*= Py and the demand function for y is y*= Py+Px Px Py 0 The following graph shows the demand function for æ, holding I and py. I Py I Px
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
Recommended textbooks for you
Microeconomic Theory
Microeconomic Theory
Economics
ISBN:
9781337517942
Author:
NICHOLSON
Publisher:
Cengage
Microeconomics A Contemporary Intro
Microeconomics A Contemporary Intro
Economics
ISBN:
9781285635101
Author:
MCEACHERN
Publisher:
Cengage
Microeconomics: Principles & Policy
Microeconomics: Principles & Policy
Economics
ISBN:
9781337794992
Author:
William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:
Cengage Learning
Principles of Microeconomics
Principles of Microeconomics
Economics
ISBN:
9781305156050
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Microeconomics (MindTap Course List)
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:
9781305971493
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Microeconomics: Private and Public Choice (MindTa…
Microeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506893
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning