The Phillie Phanatic (PP) always eats his ballpark franks in a special way; he uses a foot-long hot dog together with precisely half a bun, 1 ounce of mustard, and 2 ounces of pickle relish. His utility is a function only of these four items, and any extra amount of a single item without the other constituents is worthless. d. If the price of foot-long hot dogs increases by 50 percent (to $1.50 each), what is the percentage increase in the price of the good? e. How would a 50 percent increase in the price of a bun affect the price of the good? Why is your answer different from nort (d)?
The Phillie Phanatic (PP) always eats his ballpark franks in a special way; he uses a foot-long hot dog together with precisely half a bun, 1 ounce of mustard, and 2 ounces of pickle relish. His utility is a function only of these four items, and any extra amount of a single item without the other constituents is worthless. d. If the price of foot-long hot dogs increases by 50 percent (to $1.50 each), what is the percentage increase in the price of the good? e. How would a 50 percent increase in the price of a bun affect the price of the good? Why is your answer different from nort (d)?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![3.5
The Phillie Phanatic (PP) always eats his ballpark franks
in a special way; he uses a foot-long hot dog together with
precisely half a bun, 1 ounce of mustard, and 2 ounces of
pickle relish. His utility is a function only of these four items,
and any extra amount of a single item without the other
constituents is worthless.
d. If the price of foot-long hot dogs increases by 50 percent
(to $1.50 each), what is the percentage increase in the
price of the good?
e. How would a 50 percent increase in the price of a bun
affect the price of the good? Why is your answer different
from part (d)?
f. If the government wanted to raise $1.00 by taxing the
goods that PP buys, how should it spread this tax over
the four goods so as to minimize the utility cost to PP?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F98fdc1e3-416c-49e2-9808-872164c20a53%2Fa3866002-e9ff-4162-9a22-3d1f3b9cce00%2Fookvko_processed.png&w=3840&q=75)
Transcribed Image Text:3.5
The Phillie Phanatic (PP) always eats his ballpark franks
in a special way; he uses a foot-long hot dog together with
precisely half a bun, 1 ounce of mustard, and 2 ounces of
pickle relish. His utility is a function only of these four items,
and any extra amount of a single item without the other
constituents is worthless.
d. If the price of foot-long hot dogs increases by 50 percent
(to $1.50 each), what is the percentage increase in the
price of the good?
e. How would a 50 percent increase in the price of a bun
affect the price of the good? Why is your answer different
from part (d)?
f. If the government wanted to raise $1.00 by taxing the
goods that PP buys, how should it spread this tax over
the four goods so as to minimize the utility cost to PP?
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