Gino derives utility from only two goods, carrots (Qc) and donuts (Qd). His utility function is as follows: U(Qc,Qd) = (Qc)(Qd) The marginal utility that Donald receives from carrots (MUc) and donuts (MUd) are given as follows: MUc = Qd MUd = Qc Gino has an income (I) of £120 and the price of carrots (Pc) and donuts (Pd) are both £1. - what is Gino's budget line and what quantities of Qc and Qd will maximise Gino's utitlity? - holding income and Pd constant, what is Gino's demand curve for carrots? - suppose a tax of 1 pound per unit is levied on donuts. how will this alter Gino's utility maximisinzing market basket of goods?
Gino derives utility from only two goods, carrots (Qc) and donuts (Qd). His utility function is as follows: U(Qc,Qd) = (Qc)(Qd) The marginal utility that Donald receives from carrots (MUc) and donuts (MUd) are given as follows: MUc = Qd MUd = Qc Gino has an income (I) of £120 and the price of carrots (Pc) and donuts (Pd) are both £1. - what is Gino's budget line and what quantities of Qc and Qd will maximise Gino's utitlity? - holding income and Pd constant, what is Gino's demand curve for carrots? - suppose a tax of 1 pound per unit is levied on donuts. how will this alter Gino's utility maximisinzing market basket of goods?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Gino derives utility from only two goods, carrots (Qc) and donuts (Qd). His utility function is as follows:
U(Qc,Qd) = (Qc)(Qd)
The
MUc = Qd MUd = Qc
Gino has an income (I) of £120 and the
- what is Gino's budget line and what quantities of Qc and Qd will maximise Gino's utitlity?
- holding income and Pd constant, what is Gino's
- suppose a tax of 1 pound per unit is levied on donuts. how will this alter Gino's utility maximisinzing market basket of goods?
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