Ali has a utility function u(x, y) 5lnx + 2lny. Consider that the price of x is 100 TL, the price of y is 40 TL and monthly income is 1400 TL. Mehmet uses all of his income each month to purchase x and y. Solve the constraint optimization problem and find x*. %3D
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- True/False Marginal utility keeps falling with the each additional consumption of a good or service.Show and explain the effects in kind payments and cash payments on individual’s utility by using a graphA consumer spends all her income of K120 on the two goods A and B. Good A costsK10 a unit and good B costs K15. What combination of A and B will she purchase ifher utility function is U=4A0.5 B 0.5?
- Hi, what does it mean if the utility function is ordinal and not cardinal.Suppose Al is currently consuming five movies and two concerts per month. If his utility function is given by U = 15MC, where Mrepresents the number of movies seen and C represents the number of concerts attended, Al's total utility is equal to: 75 15 150 10 30Define Economic utility
- QUESTION ONE The only source of income available to Doreen, a level 200 student of UEW is her monthly stipend (M) from her parents. She neither saves nor borrows. Assuming she spends all her income on only two goods food (F) and Clothes (C), with Pr and Pc being the prices of the two goods respectively and having a utility function of the form: U = 6F°C i. Write an expression for Doreen's budget constraint. ii. Assuming good Fis on the vertical axis, produce a sketch of her budget constraint and determine the slope. iii. Find Doreen's monthly equilibrium demand functions for both goods. iv. With Pr and Pcgiven as ¢12 and ¢15 respectively and income of ¢300, calculate the equilibrium quantities of both goods. v. Compute the price elasticity of demand for both goods and interpret your results. vi. If income and prices of the two goods increase by 50%, calculate the equilibrium quantities of Food and Clothing.EXERCISE 7 Aisha is considering how to allocate the next 6 hours of her free time. She could choose between leisure (L) and helping her neighbour with the house chores. If she decides to help her neighbour, she is going to get paid at £25 per hour, which she can then spend on her favourite pizza (P). Suppose the price of pizza is £12.50. Aisha's preferences for leisure and pizza are given by the following utility function: U(L, P) = 3L + P. (MU₁ = 3, MUp = 1). a) Write down Aisha's budget equation and draw the corresponding budget line. Clearly label the axes and calculate the coordinates of the points of intersection of the budget line with each axis. b) Calculate Aisha's marginal rate of substitution between leisure and pizza. Explain the concept of MRS and interpret the figure obtained. c) Find Aisha's optimal consumption bundle, both algebraically and graphically. Explain your reasoning. d) Would Aisha's optimal choice change if she could get a discount on her pizza purchases so…Ayana is pitching an idea for a startup company that makes and sells solar-powered phonechargers (C). Her market research has found that consumer demand for this product can beexpressed as a function of the price of the charger itself (PC), the price of phones (PF), andthe consmer’s income (I). Consumer demand can be described by the function C(PC, PF, I) =(i−10PC)/ (PF) Suppose her chargers come in all different capacities to meet any quantity demanded, so youdon’t need to worry about restricting C to whole numbers for this problem. (a) Does this product satisfy the law of demand?Explain.
- Ayana is pitching an idea for a startup company that makes and sells solar-powered phonechargers (C). Her market research has found that consumer demand for this product can beexpressed as a function of the price of the charger itself (PC), the price of phones (PF), andthe consmer’s income (I). Consumer demand can be described by the function C(PC, PF, I) =(i−10PC)/ (PF) Suppose her chargers come in all different capacities to meet any quantity demanded, so youdon’t need to worry about restricting C to whole numbers for this problem. (a) Does this product satisfy the law of demand?Explain. (b) Calculate consumers’ income elasticity as a function of the parameters. (c) Anaya is targeting a market whose income is expected to double over the next five years.Explain whether she should expect the demand for chargers to increase or decrease, andby how much, using the language of normal, inferior, luxury, and necessity goods. (d) Calculate the cross-price elasticity ofCwith respect toPF. (e)…K Diogo has a utility function: U = 100x0.9 20.1 The price of X is p, = $10, the price of Z is p₂ = $4, and his income is $1,200. What is Diogo's optimal bundle? (round your answer to one decimal place) Xo Z₂ = units unitsDiogo has a utility function: U = 100x09z0.1 The price of X is px = $5, the price of Z is p, = $14, and his income is s800. %3D What is Diogo's optimal bundle? (round your answer to one decimal place) X, =units %3D Z, =units