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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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?
Tacos Soda Quantity Utils Quantity Utils 0 0 0 0 1 14 1 100 2 24 2 120 32 3 134 38 4 144 Suppose the table above shows your total utility from tacos and sodas. Assuming you have $12 a week to spend, and the prices of tacos and sodas are $2 and $4, respectively. Which bundle is optimal for you to choose and why? (give your answer in pairs of tacos and sodas - for instance, x tacos and y sodas).
Consider a consumer with income M, who can buy good 2₁ at price p₁ per unit and can buy good x2 at price p2 per unit. Consider a budget constraint diagram for this consumer, with quantity of good *1 measured along the horizontal axis and quantity of good 2 measured along the vertical axis. If p₁ increases and p2 increases (though not necessarily by the same percentage), while M remains unchanged, which of the following changes to the consumer's budget set definitely occur? The budget line slope becomes steeper The budget set becomes strictly larger None of these changes necessarily occur The budget set becomes strictly smaller O The budget line slope becomes flatter
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…
1) Max chooses to purchase movie tickets and restaurant meals every week with his $100. If the price of a movie ticket is $20 and the price of a restaurant meal is $25, then the slope of his budget constraint will be, a) 1/5 b) -1/5 c) 4/5 d) -4/5 2) Marginal rate of substitution(MRS) is the rate at which consumer is willing to trade one good for another. It must be true that: a) MRS is the slope of an indifference curve in reference to a particular bundle of goods. b) MRS is not the same along an indifference curve that is of usual shape. c) MRS is same along an indifference curve that is of usual shape. d) Both a) and b).
Lisa consumes only two goods, pizzas and burritos. In equilibrium, her marginal utility per slice of pizza is 10 and her marginal utility per burrito is 8. Instructions: Enter your answer rounded to two decimal places. If a slice of pizza costs $3, then the price of a burrito must be $
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
Assume that a consumer can buy only two goods, X and Y, and has an income of $13,000. The price of X is $60 and the price of Y is $140. What is the slope of the budget line if X is measured horizontally and Y is measured vertically? Note that you will need to include a negative sign in your answer. If needed, round your answer to the nearest two decimal places.
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.
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).
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

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