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Your favorite pastries are Twinkies and RingDings. The utility you derive from these is given by the function: U(T,R) = -In(7) + -In(R) where T is the number of cases of Twinkies and R is the number of cases of RingDings. A case of RingDings costs $8 and a case of Twinkies costs $4. A. Using the Lagrangian multiplier method, determine the optimal choices of cases of RingDings and Twinkies if you have $32 to spend on pastries each month. B. One day, after eating pastries, you write a letter of satisfaction to the manufacturer who responds with an offer that allows you to purchase cases of Twinkies and cases of RingDings at a discount such that the total cost, C, for any purchase is: C-8√T+4√R How many cases of Twinkies and RingDings will you purchase with this special arrangement? C. Which of the following, (i), (ii), or (iii), correctly completes this sentence? "The utility obtained with the budget constraint in part B is..." (i) less than twice as much as the utility obtained with the budget constraint in part (a). (ii) exactly twice as much as the utility obtained with the budget constraint in part (a). (iii) more than twice as much as the utility obtained with the budget constraint in part (a).

Your favorite pastries are Twinkies and RingDings. The utility you derive from these is given by the function: U(T,R) = -In(7) + -In(R) where T is the number of cases of Twinkies and R is the number of cases of RingDings. A case of RingDings costs $8 and a case of Twinkies costs $4. A. Using the Lagrangian multiplier method, determine the optimal choices of cases of RingDings and Twinkies if you have $32 to spend on pastries each month. B. One day, after eating pastries, you write a letter of satisfaction to the manufacturer who responds with an offer that allows you to purchase cases of Twinkies and cases of RingDings at a discount such that the total cost, C, for any purchase is: C-8√T+4√R How many cases of Twinkies and RingDings will you purchase with this special arrangement? C. Which of the following, (i), (ii), or (iii), correctly completes this sentence? "The utility obtained with the budget constraint in part B is..." (i) less than twice as much as the utility obtained with the budget constraint in part (a). (ii) exactly twice as much as the utility obtained with the budget constraint in part (a). (iii) more than twice as much as the utility obtained with the budget constraint in part (a).

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Your favorite pastries are Twinkies and RingDings. The utility you derive from these is given by the function: U(T, R) =-1n(T) + ln(R) where T is the number of cases of Twinkies and R is the number of cases of RingDings. A case of RingDings costs S8 and a case of Twinkies costs S4. A. Using the Lagrangian multiplier method, determine the optimal choices of cases of RingDings and Twinkies if you have S32 to spend on pastries each month. B. One day, after eating pastries, you write a letter of satisfaction to the manufacturer who responds with an offer that allows you to purchase cases of Twinkies and cases of RingDings at a discount such that the total cost, C, for any purchase is: C.Which of the following, (i),i), or), correctly completes this sentence? The utility obtained with the budget constraint in part B is... (i) less than twice as much as the utility obtained with the budget constraint in part (a). 11) exactly twice as much as the utility obtained with the budget constraint in part (a). (iii) more than twice as much as the utility obtained with the budget constraint in part (a)
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