Margot the octopus has 5 right and 3 left legs. She is crazy about shoes and will only wear matching shoes on all her 8 legs. Her utility function is given by U(q1,92) = min[3q1,5q2], where q₁ is the number of right shoes, and q2 is the number of left shoes. Assume that Margot's income is I = $70, and the prices of the right and left shoes are p₁=$4 and p2=$5, respectively. a) Draw the budget line for Margot and several of her indifference curves. Put the right

Margot the octopus has 5 right and 3 left legs. She is crazy about shoes and will only wear matching shoes on all her 8 legs. Her utility function is given by U(q1,92) = min[3q1,5q2], where q₁ is the number of right shoes, and q2 is the number of left shoes. Assume that Margot's income is I = $70, and the prices of the right and left shoes are p₁=$4 and p2=$5, respectively. a) Draw the budget line for Margot and several of her indifference curves. Put the right

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Victor is the manager of a local bank branch in College Station where he consumes bundles of two commodities x and y. Prices in College Station are px=1 and py=5. He is offered a transfer to Dallas where prices are px=2 and py=8; Victor’s utility function is U(x,y)=xy and his income in College Station is $5000. (Victor’s utility maximization is always characterized by the tangency rule). Will Victor be able to afford what he was buying in College Station if he is offered a salary in Dallas that guarantees his welfare is the same with the transfer? A. Yes B. No
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