Problem 6Casper consumes cocoa and cheese. Cocoa is sold in an unusual way. There is only one supplier, and themore cocoa you buy from him, the higher the price you have to pay per unit. In fact y units of cocoa will costCasper y² dollars (i.e. the price of y units is y dollars, hence the quadratic cost). Cheese is sold in the usualway at a price of 2 dollars per unit. Casper's income is 20 dollars and his utility function is U(z,y) = 1+2y.where r is his consumption of cheese and y is his consumption of cocoa.a. Sketch Casper's budget set and shade it in.b. Sketch some of his indifference curves and label the optimal bundle that he chooses.c. Calculate the amount of cheese and the amount of cocoa that Casper demands at these prices and thisincome, i.e. calculate the optimal bundle. (Recall that you can find the slope of any curve using the TotalDifferential, i.e. the MRS formula works in general)

Budget sets represent possible consumption points of two goods that the consumer can consume given…

Casper consumes cocoa and cheese. Cocoa is sold in an unusual way. There is only one supplier, and the more cocoa you buy from him, the higher the price you have to pay per unit. In fact y units of cocoa will cost Casper y² dollars (i.e. the price of y units is y dollars, hence the quadratic cost). Cheese is sold in the usual way at a price of 2 dollars per unit. Casper's income is 20 dollars and his utility function is U (z. y) = x+2y. where r is his consumption of cheese and y is his consumption of cocoa. a. Sketch Casper's budget set and shade it in. b. Sketch some of his indifference curves and label the optimal bundle that he chooses. c. Calculate the amount of cheese and the amount of cocoa that Casper demands at these prices and this income, i.e. calculate the optimal bundle. (Recall that you can find the slope of any curve using the Total Differential, i.e. the MRS formula works in general)

Casper consumes cocoa and cheese. Cocoa is sold in an unusual way. There is only one supplier, and the more cocoa you buy from him, the higher the price you have to pay per unit. In fact y units of cocoa will cost Casper y² dollars (i.e. the price of y units is y dollars, hence the quadratic cost). Cheese is sold in the usual way at a price of 2 dollars per unit. Casper's income is 20 dollars and his utility function is U (z. y) = x+2y. where r is his consumption of cheese and y is his consumption of cocoa. a. Sketch Casper's budget set and shade it in. b. Sketch some of his indifference curves and label the optimal bundle that he chooses. c. Calculate the amount of cheese and the amount of cocoa that Casper demands at these prices and this income, i.e. calculate the optimal bundle. (Recall that you can find the slope of any curve using the Total Differential, i.e. the MRS formula works in general)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Realizing that there is a great potential for increased tax revenue, government officials in Homeyville began discussing how they could align Airbnb rentals with hotel stays from a tax perspective. Fast-forward to 2018, at which time Homeyville has finally made tax arrangements with Airbnb to levy a $40-per-room tax on rentals. However, now the market conditions have changed. More hosts have now entered the Airbnb market, and awareness of this hotel alternative has increased demand. The following graph shows the demand and supply curves for Airbnb rentals in 2018. Use the green rectangle (triangle symbols) to illustrate the area representing the revenue raised by a $40-per-room tax. Then use the black point (cross symbol) to shade the area representing the deadweight loss generated by this tax. PRICE (Dollars per rental) 200 190 180 Demand 2018 Tax Wedge 170 + 160 150 140 130 120 110 100 0 + 40 80 120 160 200 240 280 RENTALS (Rooms per day) Supply 2018 320 360 400 Tax Revenue…
Sven makes rocking chairs for a cost of $75 each, and he sells the rocking chairs for a market price of $130 each. Deidre is willing to pay $200 for a rocking chair. However, the government believes that rocking chair manufacturers should receive more money, and set the lowest legal price rocking chairs can be sold for at $250. At the market price, Sven is willing to sell a rocking chair to Deidre, and Deidre is willing to buy a rocking chair from Sven. Unfortunately, with the new legal minimum, Sven and Deidre cannot trade with one another, and miss out on additional gains from trade. Which of the effects of a price control best fits the scenario above? A)Deadweight Loss B) Reduction in Quality C) misallocation of resources D)wasteful increase in Quanity
A friend of yours is considering two cell phone service providers. Provider A charges $120 per month for the service regardless of the number of phone calls made. Provider B does not have a fixed service fee but instead charges $1 per minute for calls. Your friend's monthly demand for minutes of calling is given by the equation Qp = 150 - 50P, where P is the price of a minute. With Provider A, the cost of an extra minute is With Provider B, the cost of an extra minute is S Given your friend's demand for minutes and the cost of an extra minute with each provider, if your friend used Provider A, he would talk for minutes, and if he used Provider B, he would talk for minutes. This means your friend would pay S for service with Provider A and S for service with Provider B. Use the following graph to draw your friend's demand curve for minutes. Then use the green triangle to help you answer the questions that follow. Note: Yo U will not be graded on an. changeS Vou mako to tha 喜G
Chloe is a chef who runs a niche food delivery business in a competitive industry. Chloe specializes in making monster calzones. Chloe sells 20 monster calzones per month. Her monthly total revenue is $5,000. The marginal cost of making a monster calzone is $300. In order to maximize profits, Chloe should A) make more than 20 calzones per month. B) make fewer than 20 calzones per month. C) continue to make 20 calzones per month. D) We do not have enough information with which to answer the question.
Assume that beef and pork are substitutes for consumers. If there is a drought in the cow grazing areas, then the drought will cause: supply curve for pork to shift rightward supply curve for pork to shift leftward. demand curve for pork to shift rightward. demand curve for pork to shift leftward. Suppose a factory that makes shirts introduces robots to replace human workers. As a result, the factory is able to reduce costs of shirts significantly. One would expect The supply curve of shirts to shift to the left. The supply curve of shirts to shift to the right. The demand curve of shirts to shift to the left. The demand curve of shirts to shift to the right.
Nora's utility function is given by U = In(C) + In(L), where U is utility, C is consumption, and L is leisure. The total time Nora has is T = 1 and is a utility maximizer. Before the Covic pandemic, the wage rate is 10, and Nora has no non-labor income. When the pandemic hit and part of the economy was locked down, Nora's wage rate decreased to 8. However, the government provided income support by sending out a non-labor income of 5 to everyone, including Nora. Nora still has a total amount of time T = 1 for leisure and work during the pandemic. Which of the following statements is correct? O Before the pandemic, Nora's labor supply is 0.2. O Before the pandemic, Nora spent time equal to 0.2 O Before the pandemic, Nora's consumption was 9. O During the pandemic, Nora's labor supply is 0.5. leisure. O During the pandemic, Nora was better off for having a higher utility level. O During the pandemic, Nora's labor supply is unchanged becauses income effects were perfectly offset by the…
Mika earns $379 per week which she spends entirely at the grocery store, purchasing either food or alcohol. The price of food is $1/unit, while the price of alcohol is $4/unit. Mika receives an additional $50/week in food stamps that can only be only be used to buy food at the grocery store (so, this money could be used to buy food but NOT alcohol). Mika knows someone who will give her cash in exchange these food stamps at a rate of $0.50 in cash for every $1 in food. stamps. Cash, of course, can be used to buy either food or alcohol. What is the vertical coordinate of the vertical intercept of Mika's budget constraint if she were to graph quantity of food on the horizontal axis and quantity of alcohol on the vertical axis? (Note: The answer may not be a whole number, so round to the nearest hundredth)
For Miranda, catching fish is not just a profitable activity, it is also her only viable source of food. She derives utility from consuming fish q as well as leisure time r, by the function U (q, r) = √gr Again, let p denote the price of fish and let w = 1 be the hourly wage that Miranda earns from working. She has a total of l = 24 hours per day to divide between labor and leisure, so that l + r = 24. a) Suppose that Miranda's expenditure on fish comes entirely from her wages pq = wł. Rewrite this condition as a budget constraint. What is the "price" of leisure and what is Miranda's "income" I? b) Write Miranda's utility maximization problem and state the first order conditions. (c) Find Miranda's demand for fish qd(p) and leisure r(p), and her indirect utility v(p).
Solve parts d,e and f Jen from Thunder Bay consumes housing (H) and food (F). Her studentstipend is $600/month. She has a utility function of U(H, F) = F1/3H2/3.The initial price of food is pF = 1 and the price of housing is pH = 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 housingto $5. If the price of food is $1 and the price of housing is $5, calculateJen’s utility maximizing bundle of goods.(c) How much does the Government spend on this program (just on Jen)?(d) Calculate her utility level using the utility function above and thequantities consumed.(e) Calculate Jen’s utility maximizing bundle and her resulting utilitylevel if the government chooses to simply give her the money theywould have spent on the program (rather than subsidize housing).How much utility does Jen get?(f) Given the two programs cost the same, which one is better for…
Maria can work up to 40 hours per week at Sparkle, one of many competitive firms that make and sell hand-crafted jewelry and pay $25 per hour. The budget constraint below shows the tradeoff that she faces in terms of earnings versus leisure each week. S earnings $1,000 Maria's weekly budget constraint 40 leisure (hours)
Suppose you have the following indirect utility function: V(Pa, Py, I) = In PxPy What are marshallian demands for x and y? I (a) (9x9y) = (22) (b) (9,9y) = (In, In 2) (c) (9, 9y) = (exp(2p/py), exp(2ppy)) I (d) (9x, gy) = (2pr+py' px+2py) What is the expenditure function for the associated expenditure minimization problem? (a) E(pa, Py, U) = (P + Py) ln(U) (b) E(pa, Py, U) = √exp(U)Papy (c) E(pa, Py, U)= (p²+p²) In(U) (d) E(pa, Py, U) = exp(U)²papy What are the individual's Hicksian demands for goods x and y? (a) (h₂, hy) = ((BU)¹/², (PU) ¹/²) (b) (ha, hy) = (RU, DU) (c) (ha, hy) = ((2 exp(U))¹/², (exp(U))¹/²) -1/2 (d) (hx, hy) = ((P₂PzU)−¹/², (P₂PzU)-¹/2) Are x and y complements or substitutes?
After talking your managerial economics class, you realize that you can probably raise your profits by price discriminating by charging different prices in the two locations. You then breakdown sales across the two locations In Laredo: You sold 200 burger meals per week at $9 and 100 meals at $10 In San Antonio: You sold 1200 meals per week at $9 and 1100 meals at $10 Using the two prices above, estimate your demand function in Laredo. What would demand be at the optimal price from Q1?