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 2 apples, 10 oranges 2 apples, 11 oranges 4 apples, 12 oranges 5 apples, 13 oranges 6 apples, 14 oranges 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. Let's say the price of oranges rises to $10/pound of oranges. Given your preferences and budget constraint, what bundle represents your new consumer equilibrium for apples and oranges?

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 2 apples, 10 oranges 2 apples, 11 oranges 4 apples, 12 oranges 5 apples, 13 oranges 6 apples, 14 oranges 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. Let's say the price of oranges rises to $10/pound of oranges. Given your preferences and budget constraint, what bundle represents your new consumer equilibrium for apples and oranges?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Maya is doing her undergrad at Queen's University. She loves donuts and chocolate chip cookies (CCC). Her utility function is given by u(x, y) = √8x +5 + 2y, where x denotes her consumption of donuts and y denotes her consumption of CCC. Her budget is $10/day. The price of a donut is $1. (a) When the price of CCC is $1, what is Maya's optimal choice of donuts and CCC? (b) When the price of CCC is $8, what is Maya's optimal choice of donuts and CCC? (c) When the price of CCC increases from $1 to $8, calculate Maya's substitution effect and income effect. (d) According to your calculation in part (c), is CCC a normal good or an inferior good? Explain. Is CCC an ordinary good or a Giffen good? Explain.
Suppose a consumer’s utility function is u = x_1^(3/2) x_2^(3/2) . She spends her budget of £27 for two goods. The prices of both goods are p1 = 6 and p2 = 6 Now suppose that instead both goods are priced as follows: There is a discount of 50% on the price of good 1 on each additional unit in excess of 3 units, and there is a discount of 50% on the price of good 2 on each additional unit in excess of 3 units. Draw the new budget constraint and derive it analytically.
Suppose that there are two goods (X and Y ). The price of X is $2 per unit, and the price of Y is $1 per unit. There are two consumers (A and B). The utility functions for the consumers are UA (X, Y): = X0.5y-0.5 UB (X,Y)= X0.8y-0.2 Consumer A has an income of $100, and Consumer B has an income of $300. PAGE 2 (a) Use Lagrangians to solve the constrained utility-maximization problems for Consumer A and Consumer B. (b) Calculate the marginal rate of substitution for each consumer at his or her optimal consumption bundles. (c) Suppose that there is another consumer (let's call her C). You don't know anything about her utility function or her income. All you know is that she consumes both goods. What do you know about C's marginal rate of substitution at her optimal consumption bundle? Why?
Q6 If the utility function of consumption of a pizzas and y sodas is ry, the cost of pizzas is $5 each, the cost of sodas is $2 each, and the total amount available for snacks is $20. Find the amounts of pizzas and sodas for which consumption will be a maximum.
Suppose your utility for goods x1 and x2 is represented by the following utility function: U(x1,x2)= x11/5 x24/5 a) What is your marginal rate of substitution, MRS12? b) If the price for good x1 is p1 = 2, the price for good x2 is p2 = 4, and your available income is m = 20, write down your budget constraint. c) Using the prices and income given at b) above, find your optimal consumption choice bundle (Marshallian demand) and its corresponding utility level. d) Illustrate your optimal consumption choice on a graph. e) For the prices given in b), what income would you need to achieve a utility level of 25?
There are two goods, apples and bananas. The price of apples is PA = $2,and the price of bananas is PB = $3. A consumer has $120 to spend, and his utility function is U(A,B)=2A2B3 a) With apples on the x axis, the slope of the budget line is ________ b) At A=2, B=1, the marginal utility of A is and the marginal utility of B is ________ c) At the optimal bundle, the consumer buys apples and bananas ______
Suppose Carlos has to choose between purchasing jewelry and water. Which of the following is the utility-maximizing rule that Carlos should follow while choosing the optimal quantities of these two goods? (Note: In the answer options that follow, MU stands for "marginal utility.") O (MU of Water) x (Price of Water) = (MU of Jewelry) x (Price of Jewelry) O MU of Water = MU of Jewelry MU of Jewelry %3D Price of Water MU of Water Price of Jewelry MU of Jewelry Price of Jewelry MU of Water %3D Price of Water Since water costs little and jewelry is expensive, it must follow that when people choose their optimal quantities of water and jewelry to purchase, the marginal utility they receive from the last piece of jewelry they buy is than the marginal utility they receive from the last gallon of water they buy.
(2) Lisa can buy either whole chickens or chicken wings at her local supermarket. Her utility function over whole chickens and chicken wings is U(xc,Xw) = 2xc + Xw, where x, and xw are chickens and chicken wings, respectively. What is her demand function xc (pc, Pw, m) for chickens?
Suppose your utility for goods x1 and x2 is represented by the following utility function: U(x1,x2)= x11/5 x24/5 a) What is your marginal rate of substitution, MRS12? b) If the price for good x1 is p1 = 2, the price for good x2 is p2 = 4, and your available income is m = 20, write down your budget constraint. c) Using the prices and income given at b) above, find your optimal consumption choice bundle (Marshallian demand) and its corresponding utility level. d) Illustrate your optimal consumption choice on a graph. e) For the prices given in b), what income would you need to achieve a utility level of 25? PLEASE ONLY ANSWER PART C, D AND E
Sheldon is very picky and his utility function of consuming cereal (C) and apple juice (A) is U=min(3C, 4A). Based on the utility function, Sheldon only consumes C and A in the following fixed proportions O A) C/A=3/2 B) C/A=4/3 O C) C/A=3/4 O D) C/A=2/3
Suppose an individual is currently spending all of their income on a bundle of books and pizza, but they are not sure whether the bundle maximizes their utility. Assume the individual has a strictly diminishing marginal rate of substitution over these two goods. At their current bundle of books and pizza, the individual's marginal utility from consuming books is 6 utils and their marginal utility from consuming pizza is 3 utils. If the current price of a book is $12 and the price of a pizza is $7, which of the following statements must be true: A. The individual can increase their utility by consuming more books and less pizza B. The individual is maximizing their utility C. The individual can increase their utility by consuming more pizza and fewer books