Jack derives utility from Hokey course (H) and Chess course (C) as given by the following utility function: U (H, C) = √HC The average price for the hokey course is 20 dollars and for chess course16 dollars. Moreover, Jack has a budget of 80 dollars. c) Find the income level which is necessary to make Jack reach the same utility level as before the price change. d) Compute the quantities demanded with the new prices and the income you found in section c. e) Compute the quantities demanded with the new prices and the original budget of 800 dollars
Marginal Rate of Technical Substitution
MRTS reaches a manufacturer when a part of the product is lowered to sustain the manufacturing level when the other part is extended. It is the level of the quantity that is lowered when one extra volume is used, and the output is unchanged.
Preferences and Utility Analysis
Before understanding what is preference and utility analysis, it is very important to understand the terms preference and utility separately.
Jack derives utility from Hokey course (H) and Chess course (C) as given by the following utility function:
U (H, C) = √HC
The average
of 80 dollars.
c) Find the income level which is necessary to make Jack reach the same utility level as before the
price change.
d) Compute the quantities demanded with the new prices and the income you found in section c.
e) Compute the quantities demanded with the new prices and the original budget of 800 dollars.
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