Now suppose that Jason's utility is entirely based on number of hours of skiing (X) and skating (Y). 3 hours of skating gives him the same utility as 8 hours of skiing. 11. Use max {ax; bY} function to describe his preferences. 12. Solve for his equilibrium consumption bundle in the general form. (Hint: you have to look at 3 different cases) 13. Suppose that 1 hour of skating costs him 20 and 1 hour of skiing costs him $10. Suppose that he has $800 to grond. What will he and un choos in this coca?

Now suppose that Jason's utility is entirely based on number of hours of skiing (X) and skating (Y). 3 hours of skating gives him the same utility as 8 hours of skiing. 11. Use max {ax; bY} function to describe his preferences. 12. Solve for his equilibrium consumption bundle in the general form. (Hint: you have to look at 3 different cases) 13. Suppose that 1 hour of skating costs him 20 and 1 hour of skiing costs him $10. Suppose that he has $800 to grond. What will he and un choos in this coca?

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 1 For the utility function U = Qx0.50Qy(1-0.50) and the budget 122 = 8Qx + 14Qy find the CHANGE in optimal consumption of Y if the price of Xincreases by a factor of 1.7. Please enter your response as a positive number with 1 decimal and 5/4 rounding (e.g. 1.15 1.2, 1.14 = 1.1).
2.
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Kai spends his income on lime (L) and ginger water (G). Lime is priced at $2, while ginger water costs $1. Suppose Kai has $30 to spend and his utility function can be represented as U(L,G) = L0.5 G0.5 What is the optimal number of lime and ginger water for Kai to purchase? b. How much utility does this combination bring him?
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Andrea has a budget of £21 to spend on toothbrushes and tooth paste. He does not receive any utility from owning a toothbrush, but for the consumption of every tube of tooth paste he gains a utility of 2 utils – but only if he owns a tooth brush. Without a tooth brush, Andrea gains no utility from consuming tooth paste. In addition, after consuming 10 tubes of tooth paste, a toothbrush needs to be replaced, i.e., Andrea needs to buy a new one. The current price of tooth brushes on the market is £5 and the current price for tooth paste is £1 per tube. Assume that Andrea aims to maximise consumer surplus. a) In a graph, draw total utility as a function of number of toothpaste tubes, assuming that Andrea buys 1 tooth brush. b) How many tubes will Andrea buy if he wants to maximise consumer surplus, assuming that Andrea can buy any amount of tooth brushes? What is Andrea's total consumer surplus? c) How many tubes will he buy if the current price is £0.50 per tube? e d) Find Andrea's…
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