3. Christina loves pizza and hates burger. Her utility function is U(p – b) =p – →b´, | where p is the number of pizzas she consumes and b is the number of burgers she consumes. John likes both pizza and burger. His utility function is U(p, b) = p + 2\b Christina has an initial endowment of no pizzas and 8 burgers. John has an initial endowment of 16 pizzas and 8 burgers. a. Graph the initial endowment and label it E b. If Christina hates burgers and John likes them, how many burgers can Christina and John be consuming at a Pareto optimal allocation? What is John's marginal utility for pizzas and burgers? Mark the locus of Pareto optimal allocations of pizzas and burgers between Christina and John on the grapsh above.

3. Christina loves pizza and hates burger. Her utility function is U(p – b) =p – →b´, | where p is the number of pizzas she consumes and b is the number of burgers she consumes. John likes both pizza and burger. His utility function is U(p, b) = p + 2\b Christina has an initial endowment of no pizzas and 8 burgers. John has an initial endowment of 16 pizzas and 8 burgers. a. Graph the initial endowment and label it E b. If Christina hates burgers and John likes them, how many burgers can Christina and John be consuming at a Pareto optimal allocation? What is John's marginal utility for pizzas and burgers? Mark the locus of Pareto optimal allocations of pizzas and burgers between Christina and John on the grapsh above.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

3. Christina loves pizza and hates burger. Her utility function is U(p – b) = p – 6",
where
is the number of pizzas she consumes and b is the number of burgers she
consumes. John likes both pizza and burger. His utility function is U(p, b) = p + 2\b
Christina has an initial endowment of no pizzas and 8 burgers. John has an initial
endowment of 16 pizzas and 8 burgers.
a. Graph the initial endowment and label it E
b. If Christina hates burgers and John likes them, how many burgers can Christina
and John be consuming at a Pareto optimal allocation? What is John's marginal
utility for pizzas and burgers? Mark the locus of Pareto optimal allocations of
pizzas and burgers between Christina and John on the grapsh above.

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