You run a catering company in DC and clients demand food services fand beverage services b. Suppose the general demand for these servicescan be derived from utility function U(f,b) = fb.If Ū = 100, P} = 4, P, = 4 and P? = 9 how much additional incomedoes the client need to be indifferent?

For an utility maximizing consumer the optimum point of consumption is achieved where the marginal…

Answered: You run a catering company in DC 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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Suppose we calculate the MRS at a particular bundle for a consumer whose utility function is U(q1,q2). If we use a positive monotonic transformation, F, to obtain a new utility function, V(q1,q2) = F(U(q1,q2)), then this new utility function contains the same information about the consumer's rankings of bundles. Prove that the MRS is the same as with the original utility function.
Clarice has a utility function: U(Y) = 1000 - (100/Y), where Y is her income. clarice has just graduated from college and has a career choice for her first job of either working as a teacher and earning $40,000 or trying to become a theatre lighting director and earning $70,000 (if there is growth in the demand for theatre) or $20,000 (if there isn't growth in the demand for theatre). there is a 50% probability of growth. a consulting firm guarantees Clarice that it already knows whether there will be growth in the demand for theatre next year. what is the maximum amount Clarice should be willing to pay for this information?
A consumer with $120 income and the utility function u(x,y) = (x^2)y where x is food and y clothing can go for shopping in one of the two stores A or B, where the prices for food and clothing are respectively pAx = 1, PAy = 80 and PBx = 8, PBy = 1. (a) If she can visit only one of the stores, which one would she go and what would be her optimal bundle there? Could she afford this very bundle at the other store? (HINT: How happy would she be if she chooses to go to store A for shopping? To store B? Which one is higher and what bundle would she buy there?) (b) If she can freely visit both stores (so that she buys each good from the store where it is sold cheaper), what would be her optimal bundle? What would she buy from each store? (c) How much money would she be willing to give up (out of her $120 budget) for the ability to visit both stores as in (b) rather than being restricted to shopping in only one store (the one she chooses in (a)? (HINT: suppose she pays $A for this privilege.…
True, false, or undetermined?
Suppose a consumer had a utility function given by: U=X + 4Y. If the price of Good X (Px) is $1 and the price of Good Y is $8 then what is the utility maximizing quantity of Good X the consumer will purchase with a budget of $4? (Round to the nearest two decimal places if necessary.)
Greg has the following utility function: u = x0.47x953. He has an income of $52.00, and he faces these prices: (p₁. p₂) = (1.00, 3.00). Suppose that the price of x, increases by $1.00. Calculate the equivalent variation for this price change.
Suppose that an agent has utility function u(x,y)=x+2y. What information is necessary to calculate the agent’s optimal consumption of x? price of y only price of x only income only price of x, price of y, and income price of x and y only

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You run a catering company in DC and clients demand food services f and beverage services b. Suppose the general demand for these services can be derived from utility function U(f,b) = fb. If Ū = 100, P} = 4, P, = 4 and P = 9 how much additional income does the client need to be indifferent?