Brian only cares about Beer (B) and Whiskey (W). His utility function over the two goods is given by U(B,W) = 4B + 5W. Let M, Let M-70, Pa 10, Pw 14. How many Beers and Whiskeys will he buy? M AB=7: W=0 B. B=0: W=5 OCB-7; W-5 OD. B 4.2; W = 2 OE. None of the above Reset Selection

Brian only cares about Beer (B) and Whiskey (W). His utility function over the two goods is given by U(B,W) = 4B + 5W. Let M, Let M-70, Pa 10, Pw 14. How many Beers and Whiskeys will he buy? M AB=7: W=0 B. B=0: W=5 OCB-7; W-5 OD. B 4.2; W = 2 OE. None of the above Reset Selection

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Form Utility

The term utility in general refers to the satisfaction earned from usage of a particular product or service. Utility always plays an important role because it influences various important elements like demand & thereby the price of the good or service as well. Though utility is not easy to measure, various types of economic models can be used indirectly. There can be various types of utilities like economic utility, marginal utility, cardinal utility, form utility.

Question

Brian only cares about Beer (B) and Whiskey (W). His utility function over the two goods is given by U(B,W) = 4B
+ 5W. Let M, Let M-70, Pa 10, Pw= 14. How many Beers and Whiskeys will he buy?
AB=7: W=0
B.B=0;W-5
OC.B 7; W-5
OD.B 4.2; W = 2
OE. None of the above
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I. A)MRS=1/3, B)MRS=1/4, C)MRS=4/3, D)MRS=12 II. A)Rhea should buy more bread, less milk, B)Rhea should buy more milk, less bread, C) Rhea maximizes her utility at bundle A, so she should not change her consumptions of either good, D) Rhea cannot afford bundle A, so she should buy less of both goods III. A)Rhea's MRS at bundle A is greater than the price ratio (Pb/Pm), B)Changing her bundle moves Rhea to a higher indifference curve, C)The slope of the indifference curve (where bundle A is found) is not equal to the slope of Rhea's budget constraint, D)All of the above statements explain your answer to part II.
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