Tracy consumes dress shoes (D) and casual Crocs (C). Her marginal utility fromconsuming casual Crocs is MU 20DC and her marginal utility from consumingdress shoes is MU= 10C2. Her annual shoe allowance is $360, which she spends8-on only dress shoes and Crocs7-U2If she pays $40 for a pair of dress shoes and $40 for a pair of Crocs, what is heroptimal consumption bundle?в-pairs of Crocs andpairs ofTracy's satisfaction-maximizing bundle containsdress shoes. (Enter your responses using integers.)3-2-1-0-02461012141618CrоcsDress shoes99

The budget line is the locus point of all the different combinations of two goods that the consumer…

Answered: Tracy consumes dress shoes (D) and…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2.5 Ms. Caffeine enjoys coffee (C) and tea (T) accord- ing to the function U(C,T) = 3C+4T. a. What does her utility function say about her MRS of coffee for tea? What do her indiffer- ence curves look like? b. If coffee and tea cost $3 each and Ms. Caffeine has $12 to spend on these products, how much coffee and tea should she buy to maximize her utility? c. Draw the graph of her indifference curve map and her budget constraint, and show that the utility-maximizing point occurs only on the T-axis where no coffee is bought. d. Would this person buy any coffee if she had more money to spend? e. How would her consumption change if the price of coffee fell to $2?
Rohan’s current marginal utility from consuming peanuts is 100 utils per ounce and his marginal utility from consuming cashews is 200 utils per ounce. If peanuts cost $0.10 per ounce and cashews cost $0.50 per ounce, is Rohan maximizing his total utility from the kinds of nuts? Enter your responses as whole numbers. At the current level of peanut consumption, Rohan receives: utils per dollar.At the current level of cashew consumption, Rohan receives: utils per dollar.Therefore, Rohan maximizing his total utility because MUp/Pp is MUc/Pc.
3. Consider the following utility function: U = 5 x1 + 2 x2 Also consider the following bundles: A=(6, 6) B=(8, 4) C=(4,11) D=(7, 9) E=(9, 3) If x1=20, how much of x2 does the consumer has to consume to obtain a utility level of 150? 50 300 170 25
Q1. Jason has preferences defined over novels (good x) and DVDs (good y) described by the utility function U(x,y)= x2y2. He has income of $120; novels cost $5 each, while DVDs are priced at $15 each. a) Calculate Jason's optimal consumption bundle, AND his maximized utility level Suppose the price of novels increases to $7.5, while the price of DVDs and income are unchanged. b) In the same diagram, draw his old and new budget constraint; AND calculate his nep optimal bundle. c) Calculate the Total Effect (TE), Substitution Effect (SE) and Income Effect (E) of novels associated with the price increase of novels; AND SHOW them in your initial diagram. (Hint: keep 2 decimals if need)
Pam has a monthly budget of £120 to be spent on T-shirts and trainers. She could afford to buy two T-shirts and two pairs of trainers. She could also buy eight T-shirts. In each case, she would be spending her entire monthly allowance. Calculate the price of a T-shirt and the price of a pair of trainers. Write down Pam’s budget equation and draw the corresponding budget line. Mark the two consumption bundles mentioned above. In your graph, clearly label the axes, the budget line, and calculate the coordinates of the points of intersection of the budget line with each axis. Interpret each of those points. Discuss how Pam’s budget set would change if the price of a T-shirt doubles. Show the relevant changes graphically. How should Pam’s income change so that she could still afford to buy two T-shirts and two pairs of trainers? Discuss how Pam’s budget constraint would change if the government imposed a tax of £3 per each pair of trainers.
Mike is a jellyfish wrangler. In June and July he spent his budget on fish tanks and wet suits. Each fish tank cost $50 and each wet suit cost $100. At Mike's optimal choice, his marginal utility from the last fish tank purchased is 200. This means that his marginal utility from the last wet suit purchased is:
am. 113.
A consumer is making purchases of products Alpha and Beta such that the marginal utility of product Alpha is 63 and the marginal utility of product Beta is 40. The price of product Alpha is $9, and the price of product Beta is $5. The utility-maximizing rule suggests that, to stay within a given budget constraint, this consumer should Multiple Choice O O O increase consumption of product Beta and increase consumption of product Alpha. make no change in the consumption of Alpha or Beta. increase consumption of product Beta and decrease consumption of product Alpha. increase consumption of product Alpha and decrease consumption of product Beta.
5. Jonas purchases only two goods, starfruit (S) and kiwi (K). He has an income of $60 and can buy starfruit at $2 per pound and kiwi at $3 per pound. His utility function is U(S,K)=3S+4K. That is, his (constant) marginal utility for starfruit is 3 and his marginal utility for kiwi is 4. What bundle of starfruit and kiwi should he purchase to maximize his utility? Why?
Gabriella obtains utility from consuming granola bars and cappuccino. The following table shows the total utility (TU) she obtains from consuming different amounts of the two goods. The price of a granola bar is $3 and the price of a cup of cappuccino is $2. She has allocated $9 to spend on granola bars and cappuccino. 1. Complete the table by calculating the marginal utility (MU) and the MU per dollar spent on each granola bar and cup of cappuccino. 2. What is Gabriella’s optimal consumption bundle of granola bars and cups of cappuccino?
Consider the figures to the right. Suppose that the individual currently consumes 5 digital apps. What happens to the person's total utility if they reduce their consumption to 4 units? Why does this fact imply that the marginal utility curve cuts through the horizontal axis of the lower figure between the fourth and fifth app consumed? Reducing consumption to 4 apps from 5 apps leaves total utility at utils in the upper , which is the figure. Hence, the marginal utility between these two quantities of apps equals value of the axis in the lower figure. Thus, the marginal utility curve crosses the axis of the lower figure between units 4 and 5. (Enter your responses as whole numbers.) Marginal Utility (utils per week) 6- 4- 22 Total Utility (utils + q r per week) 14- 12- 10- 20 ø Ø 18- 04 0 Downloaded Digital Apps Utilized per Week Downloaded Digital Apps Utilized per Week G Q
Jackie has a budget of $36 per month to spend on snacks. She can spend this budget on bags of potato chips (C) and Hershey chocolate bars (H). Potato chips cost $4 per bag, while Hershey bars cost $1 per bar. The utility that Jackie receives from consuming potato chips and Hershey bars is represented by the following utility function: U=3C2 H. Given that Jackie seeks to maximize her utility, find the number of potato chip bags and Hershey chocolate bars that Jackie will purchase each month.

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