4. Jerry lives in a dormitory that offers soft drinks and chips for sale in vending machines. Her utility function is U = 60SC (where S is the number of soft drinks per week and C the number of bags of chips per week), so her marginal utility of S is 60C and her marginal utility of C is 60S. Soft drinks are priced at 10birr each, chips 5birr per bag.
4. Jerry lives in a dormitory that offers soft drinks and chips for sale in vending machines. Her utility function is U = 60SC (where S is the number of soft drinks per week and C the number of bags of chips per week), so her marginal utility of S is 60C and her marginal utility of C is 60S. Soft drinks are priced at 10birr each, chips 5birr per bag.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![4. Jerry lives in a dormitory that offers soft drinks and chips for sale in vending
machines. Her utility function is U = 60SC (where S is the number of soft drinks
per week and C the number of bags of chips per week), so her marginal utility of
Sis 60C and her marginal utility of C is 60S. Soft drinks are priced at 10birr each,
chips 5birr per bag.
A. Write the expression for Jerry's marginal rate of substitution between soft
drink and chips.
B. Use the expression generated in part (A) to determine Jerry's optimal mix of
soft drink and chips
C. If Jerry has 100 birr per week to spend on chips and soft drink how many of
each she
she purchase per week?
5. Given the long run production function is Q = 200LK3 calculate
A. AP and AP.
B. MPL and MPK C. MRTSLK
D. elasticity of substitution
6. Given the total cost function Q = Q - 4Q? + 14Q +60
A. Specify average variable, marginal cost and average total cost function
B. Is average variable cost is reached at its minimum point at higher or lower
quantity than average total cost? Why?
C. What is the maximum output level when average variable cost is at its
minimum point?
D. Based on the given function show the trend of each cost function graphically
(AVC, AFC, ATC and MC)?
7. Given the following demand and cost functions under perfectly competitive
market
P = 180-Q and ATC = Q+20 + 200/Q
A. find profit maximizing level of price and output
B. the maximum level of profit
C. Will the firm continue or stop production at this output level? Why?
GROUP 2
An individual consumes products X and Y and spends 500birr per time period.
The prices of the two goods are 60birr per unit for X and 40birr per unit for Y. The](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2c294563-f825-4e84-9bca-fe0c4034b4b3%2F155e76b5-7199-4ff2-a847-f61ac0f06084%2F9146rrb_processed.jpeg&w=3840&q=75)
Transcribed Image Text:4. Jerry lives in a dormitory that offers soft drinks and chips for sale in vending
machines. Her utility function is U = 60SC (where S is the number of soft drinks
per week and C the number of bags of chips per week), so her marginal utility of
Sis 60C and her marginal utility of C is 60S. Soft drinks are priced at 10birr each,
chips 5birr per bag.
A. Write the expression for Jerry's marginal rate of substitution between soft
drink and chips.
B. Use the expression generated in part (A) to determine Jerry's optimal mix of
soft drink and chips
C. If Jerry has 100 birr per week to spend on chips and soft drink how many of
each she
she purchase per week?
5. Given the long run production function is Q = 200LK3 calculate
A. AP and AP.
B. MPL and MPK C. MRTSLK
D. elasticity of substitution
6. Given the total cost function Q = Q - 4Q? + 14Q +60
A. Specify average variable, marginal cost and average total cost function
B. Is average variable cost is reached at its minimum point at higher or lower
quantity than average total cost? Why?
C. What is the maximum output level when average variable cost is at its
minimum point?
D. Based on the given function show the trend of each cost function graphically
(AVC, AFC, ATC and MC)?
7. Given the following demand and cost functions under perfectly competitive
market
P = 180-Q and ATC = Q+20 + 200/Q
A. find profit maximizing level of price and output
B. the maximum level of profit
C. Will the firm continue or stop production at this output level? Why?
GROUP 2
An individual consumes products X and Y and spends 500birr per time period.
The prices of the two goods are 60birr per unit for X and 40birr per unit for Y. The
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