Problem 2Marta has preferences over books, B, and coffee, C, given by U(B,C) = BC², with the amountof coffee measured in cups per day, and books measured in books read per week. The cost ofbuying a cup of coffee each day for a week is $10, and let the cost of a book be pg. She has $60per week to spend on these items.a) Does Marta's consumer choice problem have an interior solution or a corner solution?How do you know?b) Find Marta's demand curve for Books (as a function).Hint: the marginal utilities associated with this utility function are MUB = C2 and MUC = 2BC.

Answer: Given, Utility function: UB,C=BC2Where,B=books read per dayC=cups of coffee per day Cost of…

Answered: Marta has preferences over books, B,…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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QUESTION 4 Linguini and Colette consume only éclair (x,) and profiterole (x2). Linguini has utility function UA = x4x4 and Colette has utility function UB = 2xfx. Linguini is endowed with 10 éclair (x,) and 3 profiterole (x), while Colette is endowed with 20 éclair (x,) and 9 profiterole (x2). (a) Draw an Edgeworth box with x, on the horizontal axis and x, on the vertical axis. Position Linguini on the bottom left corner and Colette on the top right comer. Indicate the total number of units of x, and x2. Label the endowment allocation. (b) Derive the equation of the contract curve, ie., find x(x). In your graph in (a), draw the contract curve.
Jasper utility function for beer and pizza can be expressed as: U(B,P) = BXP Suppose beer costs $5 per glass, pizzas cost $10 each, and Jasper has a total of $30 to spend. Assume Jaspeer is allowed to purchase fractional amounts of each good. Part A) Based on the above information, what is Jaspeer's optimal amount of beer? Enter the number below. glasses Beer = 3 Part B) Now suppose the price of beer falls from $5 down to $3. Calculate the following and fill in the blanks below. When necessary, round answers to two places after the decimal. (Hint: find the decomposition basket to calculate the substitution and income effects). Jasper's total effect on beer is to increase total consumption by glasses of beer. Jasper's substitution effect is to increase beer consumption by 0.28 Jasper's income effect is to increase beer by 1.12 glasses of beer. glasses of beer.
Joyce drinks both coffee (x) and tea (y). Her preferences over these two goods can be represented by the utility function U(x,y) =x + 3y^1/2 where x represents the number of pounds of coffee and y represents the number of cups of tea. a) Given her preferences, find her demand functions for coffee (x) and tea (y). b) Suppose that the price of a pound of coffee is $4 and that she has $56 to spend on coffee and tea. Write her demand curve for tea. Illustrate her demand curve. c) Suppose that the price of a cup of tea is $1 (the price of coffee and income remain $4 and $56, resp.). Use your demand functions to find her best bundle. In an indifference curve diagram illustrate her best bundle at these prices. For the remainder of the question, assume that her income rises to $60 and that the prices of coffee and tea are unchanged at = $4 and =1.
Mrs. Griffiths earns $5000 a week and spends her entire income on dresses and handbags, since these are the only two items that provide her utility. Furthermore, Mrs. Griffiths insists that for every dress she buys, she must also buy a handbag. What is the algebraic equation for Mrs. Griffiths budget constraint if dresses cost $25 each and handbags cost $14 each? How many of each good will she buy and represent this on a budget line with handbags on the horizontal axis Draw an indifference curve showing the optimum choice. Label the optimum as point A. What would be the marginal rate of substitution at the point that corresponds to the optimal consumption choice? Interpret the marginal rate of substitution
just question 1
Suppose we are able to model the total utility function for the consumption of two goods, good x and good z. The utility function is structured as U(x, z) = 3x2 + z2 - 2xz. The consumer is faced with the prices of goods x and z. The price for each unit of good x and z is $1 each. The consumer has an income $1 (in thousands). How many units of each good should the consumer consume so as to maximize his/her utility?
Please refer to the following information to answer the question (in bold) below: You enjoy consuming apples (A) and oranges (O). Suppose that your utility function over both goods is given by Your marginal utility function for apples is . Your marginal utility function for oranges is U (A, O) = AO³ MUA = 0³ MUO 3A0² . Currently, the price of apples is $10/peck, the price of oranges is $5/pound, and your income is $160. Assume that apples are your horizontal axis good and oranges are your vertical axis good. = When you set up the optimal decision rule for your consumer problem, which of the following statements best describes how much you will buy of apples and oranges at your consumer equilibrium? For each peck of apples, you will buy 1/3 pounds of oranges. For each peck of apples, you will buy 1 pounds of oranges. O For each peck of apples, you will buy 3 pounds of oranges. O For each peck of apples, you will buy 6 pounds of oranges.
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Help me please
Lisa consumes only two goods, pizzas and burritos. In equilibrium, her marginal utility per slice of pizza is 10 and her marginal utility per burrito is 8. Instructions: Enter your answer rounded to two decimal places. If a slice of pizza costs $3, then the price of a burrito must be $
Suppose Lorenzo has a weekly budget of $48 to spend on ranch dressing and peanut butter. Ranch dressing is priced at $4 per bottle, and peanut butter is priced at $6 per jar. If Lorenzo spends his entire $48 on ranch dressing, he can buy jars of peanut butter. buy Use the blue line (circle symbol) to plot Lorenzo's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the area that represents combinations of ranch dressing and peanut butter that are affordable for Lorenzo. Finally, place the black point (plus symbol) on the point on Lorenzo's budget constraint that corresponds to a scenario in which Lorenzo spends $24 on each good. Note: Dashed drop lines will automatically extend to both axes. PEANUT BUTTER (Jars) 24 22 20 18 2 0 + 0 2 4 12 14 16 18 20 22 bottles of ranch dressing. If he spends his entire $48 on peanut butter, he can 6 8 RANCH DRESSING (Bottles) O True False BC, ($48) O Affordable Region $24 on Each What does the slope of…
Describe and graph your own example of a budget constraint using two goods (don’t forget to label your axes). In your example, make sure to state what the budget is, the price of the two goods, what the slope of the budget constraint equals (make sure to include the correct sign), and interpret what the slope represents.

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