Diogo has a utility function,U(q, , 92) = q, 0²q, 0.8,where g, is chocolate candy and q, is slices of pie. If the price of slices of pie, p2, is $1.00, the price of chocolate candy, p1, is S$0.50, and income, Y, is $100, what isDiogo's optimal bundle?The optimal value of good q, is9, = 40 units. (Enter your response rounded to two decimal places.)The optimal value of good q, is92 = units. (Enter your response rounded to two decimal places.)ahoshortcutétv15MacBook AirDII08F3escF5F1F2!@#$&34578QWRITY一tabASFKcaps lockCVMshiftfncontroloptioncommandしのつつエレ

Answered: where q, is chocolate candy and q2 is…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The price of salad is ps = 10, the price of green juice is pg = 5, and Tom’s income is I = 100.
A consumer’s preferences over pizza (x) and steak (y) are given by u(x,y) = x^2y (HINT: MUx = 2xy and MUy = x2) and his income is I = $120 and py = $1. (a) Calculate his optimal bundle when pX = $8 (call this bundle A) and separately when pX = $1 (call this point C). (b) Finding the decomposition bundle B, calculate the income and substitution effects on the amount of pizza of a decrease in the price of pizza from pX = $8 down to pX = $1. (c) Forget about the decomposition bundle and the two effects. In (a), the price of pizza decreases, hence the agent ends up better off. Let’s quantify how much “better off” the agent becomes after this price drop, in dollars. For this, instead of the price drop, suppose the agent is given some money $m and he optimize utility with this additional gift included to his budget. What should m be, so that his optimal utility with his expanded budget is exactly equal to his utility at the bundle C (the bundle he chooses optimally when pizza price drops to…
3*. Ms Smith likes to drink wine; in particular, a french bordeaux (f) at $40 per bottle and a California varietal wine (c) priced at $8. She allocates $600 to these two each month; and her utility is: U(ƒ, c) = ƒ²/³ c¹/³ (a) Write out her (constrained) utility maximization problem. Solve for the optimal consumption of wine f and c.
Javier consumes large pepperoni pizzas, Z, and boxes of graham crackers, G. Each of his indifference curves reflects strictly diminishing marginal rates of substitution. Where Z=8 and C= 4 (point R), his marginal rate of substitution between pizzas and boxes of graham crackers equals -0.50 (MU/MU). Will she prefer a bundle with 6 pizza(s) and 7 box(es) of graham crackers (bundle T) to her current bundle? OCEDID 12- 11- 10- 9. 21 Graham Crackers (G) 7- 6 6 34 24 0 0 T Pizzas (2) R 9 10 11 12 C
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Suppose you are given the following information for a particular individualconsuming two goods, a and b: Pa = $5, Pb = $6, MUa = 100, MUb = 200, and income (m) = $200.a) Sketch the budget set. What is the slope of the Budget Line? What are maximal possibleconsumptions of a and b?b) What is the MRSab for the two goods?c) Is this person maximizing her utility? How can you tell?d) Should she consume more of good a or of b? Explain.e) Why can’t you tell what her optimal bundle is? Explain.
Please tell me which of the multiple choices in question 1.6)1.7)1.8) are correct.State only the correct ones please. 1.6) The marginal rate of substitution (MRS) can be defined as: Select one or more: a. The amount of one good that the consumer is willing to trade for one unit of the other. b. The ratio of the amounts of two goods. c. The change in the consumer’s utility when one good is substituted for another. d. The absolute value of the slope of the indifference curve. 1.7) (SEE ATTACHED PICTURE) The diagram shows that: Select one or more: a. If Angela works 24 hours a day she can still survive. b. There is a technically feasible allocation where Angela does not work. c. A new technology that produced more grain would give a larger technically feasible set. d. If Angela needed less grain to survive the technically feasible set would be smaller.
X2 Phil has preferences over olives (x₁) and ice creams (x₂) with a utility function, u(x₁, x₂)= x₁0.5+ x₂0.5. Suppose his income is $16 and the price of olives is $1 and the price of ice creams is $1, too. Which of the following is TRUE? O The utility level when he spends all of his income on good 1 is 8. O The optimal bundle Phil will choose to consume is (6,10). O The utility level at a bundle (1,16) is 11. None of the above. The optimal bundle Phil will choose to consume is (8,8).
A consumer has $100 to spend on craft beer and Schweinefleischaft (pork shanks). Suppose craft beercosts $10 per 4-pack if the customer purchases up to five 4-packs. After that, it is $5 per 4-pack. SupposeSchweinefleischaft is $5 per order of pork shanks.(a) Draw the budget constraint for this consumer, with craft beer on the horizontal axis and Schweine-fleischaft on the vertical axis.(b) Will the consumer ever purchase exactly five 4-packs of craft beer? Explain why, using both thegraph in part (a) and words.
John has $300 as income and he uses his income only for apples and bananas. If he uses his income only for apples, he can buy 10 pounds. If he uses his income only for bananas, he can buy 15 pounds. Which one is the correct formula for his budget constraint when X=pounds of apples, Y=pounds of bananas and the prices are per pound? a) More information is needed to answer the question. b) 15X + 10Y = 300 c) 10X + 15Y = 300 d) 20X + 30Y = 300 e) 30X + 20Y = 300
4. Assume Megan has preferences represented by utility function U (x₁, x2) = (x₁)¹/4 (x2)³/4 Good 1 is electricity (1) while good 2 is gasoline (x2). Suppose the consumer has an income level of m= 1000 dollars. In addition, the price of good 1 is p₁ = 5 and the price of good 2 is p2 = 5. (a) Compute the Marginal Rate of Substitution (MRS). (b) Find the optimal levels of electricity (x) and gasoline (x2) consumption for Megan. (c) Suppose the government imposes a per-unit tax of t = 5 dollars on gasoline. Find the optimal levels of electricity (x) and gasoline (x2) consumption for Megan with the tax.
Consider a consumer with preferences over two goods X (represented on the horizontal axis) and Y (repre- sented on the vertical axis). Assume that the consumer's indifference curves are strictly convex to the origin. The consumer's income equals $20, px = $2, and py = $4. At the bundle (x = 4, y = 3), the absolute value of the consumer's MRS (the marginal rate of substitution of good Y for good X) equals 1. Select the correct answer from the options below. O To maximize utility the consumer should buy less of good X and more of good Y. To maximize utility the consumer should buy more of good X and less of good Y. O The bundle x=4 and y=3 maximizes the consumer's utility.

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