Microeconomics
2nd Edition
ISBN: 9780073375854
Author: B. Douglas Bernheim, Michael Whinston
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 6, Problem 7P
(a)
To determine
Determine the marginal rate of substitution (MRS).
(b)
To determine
Determine the best choice of Person E, when
(c)
To determine
Determine the new consumption bundle, when the price of Y raises to $4.
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Students have asked these similar questions
Please answer sub-part d) of the question.
Donna and Jim are two consumers purchasing strawberries and chocolate. Jim’s utility function is ?(?,?) = ?? and Donna’s utility function is ?(?,?) = ?2? where x is strawberries and y is chocolate. Jim’s marginal utility functions are MUx=y and MUy=x while Donna’s are MUx=2xy and MUy=x2. Jim’s income is $100, andDonna’s income is $150.
What is the optimal bundle for Donna if the price of strawberries is $2 and the price of chocolate is $4?
Connie has a monthly income of $20.00 that she allocates among two goods:
meat (M) and potatoes (P).
Suppose meat costs $5.00 per pound and potatoes $2.00 per pound. Connie's
budget line (L₁) is drawn in the figure to the right.
Suppose also that her utility function is given by the equation U(M,P) = 2M + P.
What combination of meat and potatoes should she buy to maximize her utility?
pounds of
To maximize utility, Connie should buy pounds of meat and
potatoes. (Enter your responses rounded to two decimal places.)
Meat
8-
7-
6-
5-
3-
L₁
2-
1-
U₁
U₂
U3
e
10 11 12 13 14 15 16
Potatoes
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