1. Suppose that Delilah is completely indifferent between drinking Coke and Pepsi, that is, as long as it is cola she does not care about its brand. Her preferences also satisfy our "usual" assumptions. (She spends all her income on these two goods. All of our problems will have this feature, unless specified otherwise.) a) Describe her demand for Coke and Pepsi in words, given that she spends all her money on colas. b) Write down a utility function that would represent her preferences. Can you think about others? c) Draw a couple of indifference curves from her indifference map. How do they dépend on your answer(s) on b)? d) Suppose that the price of a can of Coke is $1, a can of Pepsi is $1.5, and her income is $15. Give a few examples of bundles she can afford, and draw her budget line. How much of each good will she consume? What if the price of Coke is $1.5 and the price of Pepsi is $1? What if the price of both is $1? Find her demand functions for Coke and Pepsi. Compare your answer to that of a).
1. Suppose that Delilah is completely indifferent between drinking Coke and Pepsi, that is, as long as it is cola she does not care about its brand. Her preferences also satisfy our "usual" assumptions. (She spends all her income on these two goods. All of our problems will have this feature, unless specified otherwise.) a) Describe her demand for Coke and Pepsi in words, given that she spends all her money on colas. b) Write down a utility function that would represent her preferences. Can you think about others? c) Draw a couple of indifference curves from her indifference map. How do they dépend on your answer(s) on b)? d) Suppose that the price of a can of Coke is $1, a can of Pepsi is $1.5, and her income is $15. Give a few examples of bundles she can afford, and draw her budget line. How much of each good will she consume? What if the price of Coke is $1.5 and the price of Pepsi is $1? What if the price of both is $1? Find her demand functions for Coke and Pepsi. Compare your answer to that of a).
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter6: Consumer Choices
Section: Chapter Questions
Problem 1SCQ: Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can...
Related questions
Question
Suppose that Delilah os completely indifferent between drinking Coke and Pepsi, that is, as ling as it is cola she does not care about its brand.
Transcribed Image Text:1. Suppose that Delilah is completely indifferent between drinking Coke and Pepsi, that
is, as long as it is cola she does not care about its brand. Her preferences also satisfy
our "usual" assumptions. (She spends all her income on these two goods. All of our
problems will have this feature, unless specified otherwise.)
a) Describe her demand for Coke and Pepsi in words, given that she spends all her
money on colas.
b)
Write down a utility function that would represent her preferences. Can you think
about others?
c) Draw a couple of indifference curves from her indifference map. How do they dépend
on your answer(s) on b)?
d) Suppose that the price of a can of Coke is $1, a can of Pepsi is $1.5, and her income is
$15. Give a few examples of bundles she can afford, and draw her budget line. How
much of each good will she consume? What if the price of Coke is $1.5 and the price
of Pepsi is $1? What if the price of both is $1? Find her demand functions for Coke
and Pepsi. Compare your answer to that of a).
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 6 steps with 4 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:
9781305971493
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:
9781305971493
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Microeconomics
Economics
ISBN:
9781305156050
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc