Joe Bob from Workout Problem 4.12 has a cousin Don who consumes goods 1 and2. Don thinks that 3 units of good 1 is always a perfect substitute for 2 units of good2. Which of the following utility functions is the only one that would not representDon's preferences?O Ux1, x2) = min{2x1, 3x2).O Uxq, x2) = 20x1+ 30x2 - 10,000.%3DO Ux1, x2) = 2x1 + 3x2 + 1000.%3DO Ux, x2) = 4x, + 12x, x2 + 9x²2.More than one of the above does not represent Don's preferences.

We know that utility function of perfect substitute is the form of straight line equation…

Answered: Joe Bob from Workout Problem 4.12 has a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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John likes Coca-Cola. After consuming one Coke, John has a total utility of 10 utils. After two Cokes, he has a total utility of 25 utils. After three Cokes, he has a total utility of 50 utils. Does John show diminishing marginal utility for Coke or does he show increasing marginal utility for Coke? Suppose that John has $3 in his pocket. If Cokes cost $1 each and John is willing to spend one of his dollars on purchasing a first can of Coke, would he spend his second dollar on a Coke, too? What about the third dollar? If John’s marginal utility for Coke keeps on increasing no matter how many Cokes he drinks, would it be fair to say that he is addicted to Coke? *use tables and/or graphs if possible, please original work
John likes Coca-Cola. After consuming one Coke, John has a total utility of 10 utils. After two Cokes, he has a total utility of 25 utils. After three Cokes, he has a total utility of 50 utils. Does John show diminishing marginal utility for Coke, or does he show increasing marginal utility for Coke? Supposethat John has $3 in his pocket. If Cokes cost $1 each and John is willing to spend one of his dollars on purchasing a first can of Coke, would he spend his second dollar on a Coke, too? What about the third dollar? If John’s marginal utility for Coke keeps on increasing no matter how many Cokes he drinks, would it be fair to say that he is addicted to Coke?
Taylor's marginal utility from watching movies and from eating out (in utils) is shown in the accompanying table. Taylor spends exactly $100 every month on these two forms of entertainment; the price of each movie is $10 and the price of each dinner is $20. Movies Marginal Utility Per Month Per Movie 1 2 3 4 Multiple Choice O 4; 6; 2 O 3:2; 6 If Taylor eats out 3 times a month, Taylor will watch O 4; 6; 1/2 60 50 20 O 3; 4; 4 5 Dinners Out Marginal Utility Per Month Per Dinner 1 2 3 4 150 140 120 100 movies, and have marginal utility per dollar of from eating out and a marginal utility per dollar of from going to the movies.
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A consumer is making purchases of products Alpha and Beta such that the marginal utility of product Alpha is 63 and the marginal utility of product Beta is 40. The price of product Alpha is $9, and the price of product Beta is $5. The utility-maximizing rule suggests that, to stay within a given budget constraint, this consumer should Multiple Choice O O O increase consumption of product Beta and increase consumption of product Alpha. make no change in the consumption of Alpha or Beta. increase consumption of product Beta and decrease consumption of product Alpha. increase consumption of product Alpha and decrease consumption of product Beta.
TABLE 6-1 Quantity (burgers) Total Utility Marginal Utility 0. 1 20 20 44 24 X 22 4. 84 y Refer to Table 6-1. The table shows Antonio's total and marginal utility from eating burgers. What is the marginal utility that Antonio gets from eating the 4th burger (y)? O 22 18 16 20
E2
3- Suppose there are two agents Ahmet and Berk in an economy, and both consume two goods X and Y. Also assume that price of X is 2 YTL and Y is the numeraire good, thus price of Y is 1 YTL. Ahmet and Berk has the following utility functions:UAhmet (XA,YA)= 5ln(XA)+ln(YA)UBerk (XB,YB)= XB0,5 YB0,5a. Now assume that both X and Y are private goods. Write down the optimality condition for both agents. Then, write down the optimal level of X as a function of Y for both agents.
Refer to the table below. The consumer has only $16 to spend on X and Y. Px=$2, Py=$4. What is the marginal utility of the 4th unit of Y?* Number of TUX TUy units 1 50 40 80 70 3 100 90 4 110 100 5 115 105 O 50 O 10 100
Refer to the accompanying table. The marginal utility of the 3rd dinner is Total Marginal Utility Utility 100 Number of Dinners. Out Per Week 1 2 3 4 Multiple Choice O о O 155. 55. 120. 65. 220 250 65
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