Q: You are considering going to a football game. However, the roads are cover in ice due to bad…
A: If you go to the football game, your utility function will be: ug(Z) + ui(D) = In(Z - 3) - In(2 - 1)…
Q: Vhen consumers have a budget, their utility is maximized by buying a combination of goods such hat…
A: A rational consumer seeks to maximize the utility received in spending his or her income in such a…
Q: Michael does not like to mix peanut butter and jelly in the same sandwich. However, he will consume…
A: May be define as a term that is the total satisfaction derived from the consumption of a particular…
Q: Suppose Kayla has preferences over cakes (c) and pints of ice cream (i) that can be characterized…
A: To determine how many pints of ice cream Kayla would be willing to give you in exchange for one…
Q: You have $4,000 to spend on entertainment this year (lucky you!). The price of a day trip (T) is $40…
A: a) The price of a day trip (T) is $40 and theprice of a pizza and a movie (M) is $20. Suppose that…
Q: Assume you are spending your full budget and purchasing such amounts of X and Y that the marginal…
A: Marginal utility is additional utility derived from one extra unit of good consumed.
Q: Consider a hypothetical consumer named Hayden who is shopping for bread and brie. The graph with…
A: The graph shows two points and associated values for bread and brie combinations correspond to…
Q: Donna and Jim are two consumers purchasing strawberries and chocolates. Jim’s utility function is U…
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Q: Rafe is optimally choosing to consume 6 apples and 3 bananas. The prices of apples and bananas are…
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Q: Pedro, a retired economics professor, grows lemons and oranges in his back- yard. He consumes some…
A: Given information Pedro's utility function U= Min(X,Y) An endowment of lemon (X)=20 pounds…
Q: You were presented with a utility maximizing rule which states: If you always choose the item with…
A: A state of maximal satisfaction is referred to as Consumer's Equilibrium. The consumer's equilibrium…
Q: Suppose you have the following utility for bananas (b) and cars (c): U=max(b,c). Suppose the price…
A: Walras's law is an economic theory, which states that the existence of excess supply in one market…
Q: every week is given by U(t) = 11t - 212. where t is measured in hours. They play on a badminton…
A: A) Equilibrium point is that where, Marginal Utility = Price Or, MU= price Given, U(t) = 11t - 2t2…
Q: Martha spends 5 hours of free time exercising and playing music per day. The table below represents…
A: Marginal utility (MU) is defined as the extra utility or benefit a consumer gets by consuming an…
Q: John currently lives in Sydney where he earns $2700 a week as a high school principal. If he moves…
A: A consumer consumes goods and services to maximize their utility. The utility is the want satisfying…
Q: Maya is doing her undergrad at Queen's University. She loves donuts and chocolate chip cookies…
A: a) When the price of CCC (chocolate chip cookies) is $1, which is the same as the price of donuts,…
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A:
Q: Suppose a consumer has a budget of $200 to spend on two goods, X and Y, whose prices are $20 and…
A: Answer: Given, Total budget = $200 Price of good X PX=$20Price of good Y PY=$10 (d). A consumer is…
Q: Granny lives in the Woods and consumes only bread and fruits. One week she falls ill and has to ask…
A: The utility function refers to the overall happiness or satisfaction that an individual receives out…
Q: Calculate the Marginal Utility of Y What is the optimal Choice of X and Y given the PX = $6, PY = $2…
A: Marginal utility is the added satisfaction that a consumer gets from having one more unit of a good…
Q: Is Harry spends his weekly income M > 0 on two commodities, food (X) and rental videos (Y) His…
A: A good is said to be inferior if the demand decrease as income increase. For inferior goods, the…
Q: (good x) and clothing (good y): 1) u₁(x, y) = 3x²y 2) u₂(x, y) = 2√x + y 3) uz(x, y) = x0.6y0.4 4)…
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Q: John currently lives in Sydney where he earns $2700 a week as a high school principal. If he moves…
A: John currently lives in sydney where he earns $2700 a week In Batemans John will earn = $2100 a week…
Q: Matthew Hamming is stranded on an island. He has decided that he will spend exactly 10 hours a day…
A: Utility function The utility function is a study that measures the combination of two goods. under…
Q: Suppose Jack is currently consuming nine movies and nine concerts per month. It his utility function…
A: GIVEN Suppose Jack is currently consuming nine movies and nine concerts per month. If his utility…
Q: 5. Casper consumes cocoa and cheese. Cocoa is sold in an unusual way. There is only one supplier,…
A: Budget sets represent possible consumption points of two goods that the consumer can consume given…
Q: While visiting family in Mexico, your professor has a budget of $ 255 ($ = pesos) that he spends on…
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Q: Last week, neither Alistair nor Bodana purchased blueberries (x). Both consumers had $30 to spend on…
A: a) Alistair's budget constraint is given by 3x + 3y = 30, which simplifies to x + y = 10. Bodana's…
Q: Smith and Jones are stranded on a desert island. Each has in her possession some slices of ham (H)…
A: The utility is the strength of goods that satisfies the consumer's wants after consuming them. Thus…
Q: Jane receives utility from days spent traveling on vacation domestically (D) and days spent…
A: The marginal rate of substitution is the ratio of marginal utility of good x to the marginal rate of…
Q: Fang likes playing badminton with her friends. Her utility function for playing badminton every week…
A: Utility function is a significant idea that actions inclinations over a bunch of labor and products.…
On Sundays, people in Los Angeles consider a boat to Catalina Island to spend the day on the beach there. The utility that a person gets from visiting Catalina is 1-[n/10] – p , where n is the number of visitors on the island and p is the price of round-trip transportation (by boat). (Note that a visitor obtains more satisfaction if there are fewer other visitors on the island). The utility of staying home is zero.
In equilibrium, how many people visit the island on a given Sunday? ( Your answer should depend on p.)
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- Rohit likes playing badminton with his friends. His utility function for playing badminton every week is given by U(t) = 11t - 212. where t is measured in hours. They play on a badminton court, which they can rent per hour. Suppose the current price to play on the badminton court is $2.50 per hour. a) How many hours should Rohít play if he wishes to maximise his utility? b) Explain what we mean by the principle of diminishing marginal utility. Does the principle apply in Rohit's case? Explain why? In a diagram with income in Dollars on the horizontal axis and quantity on the vertical axis, show the relationship between Rohit's budget and the number of hours that would maximise his consumer surplus.While visiting family in Mexico, your professor has a budget of $ 255 ($ = pesos) that he spends on tacos and tequila. The price of tacos is $ 6 and a shot of tequila is priced at $ 16. During his visit the price of tacos changes to $ 5. Assume your professor has a Cobb-Douglas utility function with (tacos) parameter a = ( 27 / 100). How many shots of tequila does your professor purchase ? (Assume both goods are commodities.) (Answer is : 11.63)John currently lives in Sydney where he earns $2700 a week as a high school principal. If he moves to Batemans Bay, he has to accept a position as a classroom teacher where he will earn $2100 a week. John only considers two goods, cost of living (c) and health (h). In Sydney, pe = 54 and ph = 90. In Batemans 1 1 Bay, Ph = 36. John's utility function is u(c, h) = h + cihi. a) What is John's optimal consumption of h in Sydney? b) What would be John's optimal consumption of c in Batemans Bay? c) What is the maximum cost of living ph such that John will accept to move to Batemans Bay?
- Rafe is optimally choosing to consume 6 apples and 3 bananas. The prices of apples and bananas are p. = 7 and pb - 7. Which of the following utility functions over quantities of apples (a) and bananas (b) could represent Rafe's preferences? = u(a, b)-a4/5 61/5 Ou(a, b) = a¹/5 64/5 Ou(a, b)-a2/3 b1/3 Ou(a, b)-a¹/3 2/3Suppose Kayla has preferences over cakes (c) and pints of ice cream (i) that can be characterized using the utility function u (c, i) = √ci. Kayla is currently in possession of 2 cakes and 4 pints of ice cream. If you offered to trade her one cake for some ice cream, how many pints would she be willing to give you?You have $4,000 to spend on entertainment this year (lucky you!). The price of a day trip (T) is $40 and theprice of a pizza and a movie (M) is $20. Suppose that your utility function is U(T, M) = T3/4M1/4.a. What combination of T and M will you choose? b. Suppose that the price of day trips rises to $50. How will this change your decision?
- The following five individuals have different utility functions over food (good x) and clothing (good y): 1) u₁(x, y) = 3x²y 2) u₂(x, y) = 2√x + y 3) Uz(x, y) = x0.6y0.4 4) u₁(x, y) = x² + y² 1 5) us(x, y) = x + 3y For each of these people: a) Compute their marginal utilities of good x, MUx = Ju(x,y) MU, = ду du(x,y) ax b) Check whether the property of "more is better" is satisfied for both goods? Explain. [Hint: Check whether marginal utilities are positive assuming positive amounts of good x and good y] ƏMUX əx and marginal utility of good y, c) Does the marginal utility of good x diminish, remain constant, or increase as each of the individuals buys more x? Explain. [Hint: There are 2 ways to do it: 1) visually check what happens to the expression of MUx when x increases (does it decrease, keep constant or decrease?); or 2) take the partial derivative of this marginal utility with respect to x, that is ƏMUx .aMUX ƏMUX If 0, the marginal utility of x is increasing in x] d) Does the…Matthew Hamming is stranded on an island. He has decided that he will spend exactly 10 hours a day gathering food. He can either spend this time gathering coconuts or catching fish. He can catch 2 fish per hour and he can gather 3 coconuts per hour. Matthew's utility function is U(FC) = 3F0.60.3 a. How many fish should Matthew catch and how many coconuts should he gather so that his consumption maximizes his utility? Illustrate the equilibrium with a graph b. One day a native inhabitant of another island arrives on the island. The visitor offers Matthew trade of 3 fish for 1 coconut. The trade fee costs 1 fish (that must be paid prior to the exchange). Will Matthew decide to trade? What will Matthew produce and consume? Justify your answer and provide a graph.Maya is doing her undergrad at Queen's University. She loves donuts and chocolate chip cookies (CCC). Her utility function is given by u(x, y) = √8x +5 + 2y, where x denotes her consumption of donuts and y denotes her consumption of CCC. Her budget is $10/day. The price of a donut is $1. (a) When the price of CCC is $1, what is Maya's optimal choice of donuts and CCC? (b) When the price of CCC is $8, what is Maya's optimal choice of donuts and CCC? (c) When the price of CCC increases from $1 to $8, calculate Maya's substitution effect and income effect. (d) According to your calculation in part (c), is CCC a normal good or an inferior good? Explain. Is CCC an ordinary good or a Giffen good? Explain.
- Jane receives utility from days spent traveling on vacation domestically (D) and days spent traveling on vacation in a foreign country (F), as given by the utility function U(D,F) = 10DF. In addition, the price of a day spent traveling domestically is $100, the price of a day spent traveling in a foreign country is $400, and Jane’s annual travel budget is $4000. Suppose F is on the horizontal axis and D is on the vertical axis. Jane's marginal rate of substitution between F and D is equal to 10 1 F/D D/FMichael does not like to mix peanut butter and jelly in the same sandwich. However, he will consume them separately; for him, a sandwich with 1 spoon of peanut butter is exactly the same as a sandwich with 2 spoons of jelly. Michael has an income of m = 50, and the prices per spoonful of peanut butter and jelly are pPB=5 and pJ=11. Please write down Michael’s utility function over peanut butter (PB) and jelly (J). 2. Please determine Michael’s Marshallian demands PB*m and J*m3. Please determine Michael’s new Marshallian demands PB*m and J*m, when the price of peanut butter falls to pPB = 1.4. What are the (Hicks) SE and IE? Draw a diagram to show your analysis, with peanut butter on thehorizontal axis, and jelly on the vertical axis. 5. Recall that there are two different types of substitution effects. For example, in Q2 we have used theHicks SE. Does your answer to the last part change if we use the Slutsky SE? Justify. 6. Nam likes his peanut butter and jelly sandwiches with exactly…Consider a hypothetical consumer named Hayden who is shopping for bread and brie. The graph with bread and brie on the axes presents the utility‑maximizing combinations of bread and brie that Hayden chooses when the price of bread is $1.00$1.00 per loaf and the price of brie is $4.00$4.00 and $6.00$6.00 per wheel, respectively. The other graph shows Hayden's demand curve for brie. The two points and associated values in the graph for bread and brie combinations correspond to points A and B in the graph of the demand curve for brie. What are the specific prices and quantities of brie associated with points A and B on Hayden's demand curve? price of brie at point A: $$ quantity demanded at point A: price of brie at point B: $$ quantity demanded at point B:
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