3. Suppose that Lisa likes noodles x, and porridge x,, and her preferences are described by 1 a b the following utility function :U (x,, x,) = xx,. Find the following variables: 1 2 A. The optimal fraction (percentage) of income spent on porridge. B. The optimal amount of total cash (dollars) spent on porridge. C. The optimal quantity of noodles consumed. D. The slope of the indifference curve at the optimal bundle for the following values of parameters: a). a = 4, b = 8, p 5, p 10, m = 60 %3D b), a=글,6-3,p 1-4, p ,= 1, m = 12 %3D 2 c). a = , b = .p 1- 5, p ,= 1, m= 20 Hint: Calculating optimal choices using the demand formulas for Cobb Douglas Utility Function.
3. Suppose that Lisa likes noodles x, and porridge x,, and her preferences are described by 1 a b the following utility function :U (x,, x,) = xx,. Find the following variables: 1 2 A. The optimal fraction (percentage) of income spent on porridge. B. The optimal amount of total cash (dollars) spent on porridge. C. The optimal quantity of noodles consumed. D. The slope of the indifference curve at the optimal bundle for the following values of parameters: a). a = 4, b = 8, p 5, p 10, m = 60 %3D b), a=글,6-3,p 1-4, p ,= 1, m = 12 %3D 2 c). a = , b = .p 1- 5, p ,= 1, m= 20 Hint: Calculating optimal choices using the demand formulas for Cobb Douglas Utility Function.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:3. Suppose that Lisa likes noodles
and porridge x2»
and her preferences are described by
the following utility function :U (x, ,x,)
a b
Find the following variables:
%3D
1'
A. The optimal fraction (percentage) of income spent on porridge.
B. The optimal amount of total cash (dollars) spent on porridge.
C. The optimal quantity of noodles consumed.
D. The slope of the indifference curve at the optimal bundle for the following values of
parameters:
a). a = 4, b = 8, p ,=5, p
10, m = 60
b). a = , b=,p
= 4, p ,= 1, m = 12
1
%3D
2
c). a = , b =p
5, р
= 1, m = 20
Hint: Calculating optimal choices using the demand formulas for Cobb Douglas Utility
Function.
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