4. Jen from Thunder Bay consumes housing (H) and food (F). Her student stipend is $600/month. She has a utility function of U(H, F) = F'/3 H²/3¸ The initial price of food is pp = 1 and the price of housing is pí = 10. (a) Determine how much food and housing she consumes. (b) Suppose the government decides to subsidize her housing by 50%. This has the effect of lowering the price she actually pays for housing to $5. If the price of food is $1 and the price of housing is $5, calculate Jen's utility maximizing bundle of goods. (c) How much does the Government spend on this program (just on Jen)?
4. Jen from Thunder Bay consumes housing (H) and food (F). Her student stipend is $600/month. She has a utility function of U(H, F) = F'/3 H²/3¸ The initial price of food is pp = 1 and the price of housing is pí = 10. (a) Determine how much food and housing she consumes. (b) Suppose the government decides to subsidize her housing by 50%. This has the effect of lowering the price she actually pays for housing to $5. If the price of food is $1 and the price of housing is $5, calculate Jen's utility maximizing bundle of goods. (c) How much does the Government spend on this program (just on Jen)?
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter6: Consumer Choice And Demand
Section: Chapter Questions
Problem 8QFR
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JUST ANSWER a,b,c
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