Consider a society consisting of just a farmer and a tailor. The farmer has 10 units of food but no clothing. The tailor has 20 units of clothing but no food. Suppose each has the utility function U = F x C. The price of clothing is always $1. Suppose the current price of food is $3. The price of food that clears both markets is; %3D O $0.5 O$1 O $2 O$2.5 O$ 4 Show your work

Consider a society consisting of just a farmer and a tailor. The farmer has 10 units of food but no clothing. The tailor has 20 units of clothing but no food. Suppose each has the utility function U = F x C. The price of clothing is always $1. Suppose the current price of food is $3. The price of food that clears both markets is; %3D O $0.5 O$1 O $2 O$2.5 O$ 4 Show your work

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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6.
Let U(x.y) =V(xy) Let I = $100, Px = $25 and Py = $10 be the initial set of prices and income. Now, let Py fall to $10. What is the compensating variation for this change in prices? O A. 24.50 O B. 30.25 O C. 36.75 O D. 40.40 Reset Selection
brownie has $100 that he can spend on milk and gas. A gallon of milk costs $5.However, government gives its citizens a coupon that entitles people to 20%discount on their first 10 gallon milk purchases. Gas costs $4 per gallon andgovernment charges $1 for each gallon of purchased gas. John’s utility functionis U (x, y) = 9x+10y, where x and y represent gallons of milk and gas consumed,respectively. What is John’s optimal consumption of milk and gas?Question 3 Part bIf government removes the quantity restriction to which the coupon applies (i.e.20% discount is applied to any quantity of milk purchased), what will be John’soptimal consumption?
There are 40 people living in a village each having preference over apples andshirts represented by U(a,b) = a1/3s2/3, where a and s are amount of applesin pounds and shirts consumed, respectively. The price of a shirt is $10. Each villager has $300 income. Apples are supplied to the village by a farmer, whose supply function is S(pa) = 1000pa.Part a1What is the equilibrium price of apples? How many pounds of apples does eachvillager consume?Part a2What is the aggregate net consumer surplus at the equilibrium?Part a3What is the price elasticity of demand at the equilibrium?Part b1Suppose 50 more people move in to the village. What is the equilibrium pricenow? Part b2Are consumers better or worse off now? Why? If a consumer is worse off, byhow much additional income he/she needs to be compensated in order to be aswell off as in Part a.
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please only do: if you can teach explain each What does it mean?there is no quantity of wine that he can convert to grapes. Thus, for example, if he purchases 4 units of grapes and 3 units of wine, he could consume any bundle (4-s, 3+ s) why the s ? What does mean? with s € [0,4] how to know what to look at: If p₁ < p2 or p1 ≥ p2, why these? Please how to solve: x(p, w) = (2w/3p1, w/3p1) (2w/3p1, w/3p2)
Suppose that price of good X rises by 25 % while price of Y rises by 50% and Income rises by 50%. Then which of the following is correct? O Budget line becomes flatter and consumer is able to afford new bundles that were not affordable before. Budget line becomes steeper and consumer is not able to afford some bundles that were affordable before. Budget line becomes flatter and consumer is not able to afford some bundles that were affordable before. Budget line becomes steeper and consumer is able to afford new bundles that were not affordable before.
Assume we are measuring coffee on the horizontal axis and flowers on the vertical axis. The government introduces a tax on coffee consumed beyond C* units. What will happen to the budget constraint? O The budget constraint will become kinked at C* units of coffee and will have a flatter slope at units beyond C*. O The budget constraint will pivot inwards around the horizontal intercept. O The budget constraint will pivot outwards around the vertical intercept. O The budget constraint will shift outwards and become steeper. O The budget constraint will become kinked at C* units of coffee and will have a steeper slope at units beyond C*. O No answer.
X2 Phil has preferences over olives (x₁) and ice creams (x₂) with a utility function, u(x₁, x₂)= x₁0.5+ x₂0.5. Suppose his income is $16 and the price of olives is $1 and the price of ice creams is $1, too. Which of the following is TRUE? O The utility level when he spends all of his income on good 1 is 8. O The optimal bundle Phil will choose to consume is (6,10). O The utility level at a bundle (1,16) is 11. None of the above. The optimal bundle Phil will choose to consume is (8,8).
case 1,2,3
Suppose that at a price of 25 cents per orange, 300 consumers each demand 2 oranges, and at a price of 20 cents per orange, 400 consumers each demand 4 oranges. Therefore, the market demand for oranges is at a price of 25 cents per orange and at a price of 20 cents per orange. Multiple Choice 300; 400 O 1,200; 3,200 600; 1,600 O 2; 4