### Economics Quiz#### Question 1:**Question:** Jake likes Coke (C) and Pepsi (P), and he gets one unit of utility from consuming either one Coke or one Pepsi. $ P_C $ is the price of Coke and $ P_P $ is the price of Pepsi. We know that Coke is more expensive than Pepsi ($ P_C > P_P $). What is Jake’s indirect utility?**Options:**a. $ \frac{1}{P_P + P_C} $b. $ \frac{1}{P_P} $ *(Selected Option)*c. $ \frac{1}{P_C \cdot P_P} $d. $ \frac{1}{P_C} $ #### Question 2:**Question:** Fiorentina spends 50% of her income on books and the rest of her income on candles. We know that her income elasticity of demand for books is 1.5. What’s her income elasticity of demand for candles?**Options:**a. $ \frac{1}{2} $ *(Selected Option)*b. $ \frac{5}{6} $c. $ 1 $d. $ 1.2 $#### Explanation:**First Question:**Understanding Jake's indirect utility involves recognizing his preference and the prices he is subject to. Since Coke is more expensive than Pepsi, the optimal choice for maximum utility needs assessment based on the given prices.**Second Question:**Here, the problem requires using the information on how Fiorentina divides her income between books and candles, along with given elasticity, to determine the elasticity of demand for candles. The elasticity calculation follows by understanding complement and substitution effects in simple consumer behavior models.#### Answer Explanation:- For the first question, the selected answer being $ \frac{1}{P_P} $ suggests a focus on the price of Pepsi, given it's cheaper.- For the second question, interpreting the selected elasticity for candles should relate inversely to books given the split income spending pattern.

Since you have asked multiple question, we will solve the first question for you. If you want any…

Jake likes Coke (C) and Pepsi (P), and he gets one unit of utility from consuming either one Coke or one Pepsi. pc is the price of Coke and pp is the price of Pepsi. We know that Coke is more expensive than Pepsi (pc > Pp). What is Jake's indirect utility? Oa. PrtPc Ob. PP Oc. PCPP O d. Pc Clear my choice

Jake likes Coke (C) and Pepsi (P), and he gets one unit of utility from consuming either one Coke or one Pepsi. pc is the price of Coke and pp is the price of Pepsi. We know that Coke is more expensive than Pepsi (pc > Pp). What is Jake's indirect utility? Oa. PrtPc Ob. PP Oc. PCPP O d. Pc Clear my choice

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter20: Consumer Choice And Elasticity

Section: Chapter Questions

Problem 4CQ

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