Question 1. (15 points) Suppose that Ken cares only about bathing suits (B) and flip-flops (F)....
Question 1. (15 points) Suppose that Ken cares only about bathing suits (B) and flip-flops (F). His utility function is U = B 0.6F 0.4. The price of bathing suits are $10, and the price of flip-flops are $4. Ken has a budget of $100. (For Version 2, Income is $200 but prices remain the same).
(d) (5 points) What is the optimal choice of B and F for Ken to maximize his utility?
Homework Answers
![V= Bobo.4 PB $10 PF = $4 Budget = $100 MUB -0.4 F 0.4 0.6B At optimality MRS= mur = O.UBO GF-0.6 3 1/2 = 215 - 13F=5B] lo B+](http://img.homeworklib.com/questions/cc1fdee0-6fab-11ea-b329-51ce4215c0ee.png?x-oss-process=image/resize,w_560)
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Question 1. (15 points) Suppose that Ken cares only about
bathing suits (B) and flip-flops (F)....
Question 1. (15 points) Suppose that Ken cares only about bathing suits (B) and flip-flops (F)....
Question 1. (15 points) Suppose that Ken cares only about bathing suits (B) and flip-flops (F). His utility function is U = B 0.6F 0.4. The price of bathing suits are $10, and the price of flip-flops are $4. Ken has a budget of $100. (For Version 2, Income is $200 but prices remain the same). (a) (4 points) Draw a graph containing Ken’s budget line with bathing suits (B) on the x-axis and flip-flops (F) on the y-axis. Define...
Suppose that Ken cares only about bathing suits (B) and flip-flops (F). His utility function is...
Suppose that Ken cares only about bathing suits (B) and flip-flops (F). His utility function is U = B 0.6F 0.4. The price of bathing suits are $10, and the price of flip-flops are $4. Ken has a budget of $100. a)Draw a graph containing Ken’s budget line with bathing suits (B) on the x-axis and flip-flops (F) on the y-axis. Define the slope of this line. b)Define the two conditions that need to be met for a consumption allocation...
Suppose that Ken cares only about bathing suits (B) and flip-flops (F). His utility function is...
Suppose that Ken cares only about bathing suits (B) and flip-flops (F). His utility function is U = B0.8F0.2. The price of bathing suits is $30, and the price of flip-flops is $2. Ken has a budget of $150. a. What Lagrangian equation can be used to solve Ken's utility maximization problem? b. Derive the first-order conditions for the maximization problem. c. What is the solution to Ken's maximization problem?
Question 1. Suppose that Bruce cares only about barbecued chicken (B) and fish (F). His utility...
Question 1. Suppose that Bruce cares only about barbecued chicken (B) and fish (F). His utility function is u = 30.470.6. The price of barbecued chicken is $5, and the price of fish is $10. Bruce has a budget of $100. (a) Write down the consumers maximization problem. (b) What are the consumption quantities of B and F that will maximize Bruce's utility?
18. Suppose that Maggie cares only about chai and bagels. Her utility function is U(C,B) C...
18. Suppose that Maggie cares only about chai and bagels. Her utility function is U(C,B) C 0.8B 0.2, where C is the number of cups of chai she drinks in a week, and B is the number of bagels she eats in a week. The price of chai is $2, and the price of bagels is S1. Maggie has S300 to spend per week on chai and bagels. a. What is Maggie's utility-maximizing bundle of chai and bagels? Use the...
1- Suppose that a firm producing commodity with the following production function: Y = 20X,X2 Then,...
1- Suppose that a firm producing commodity with the following production function: Y = 20X,X2 Then, assume that the maximum amount the firm can spend on these two inputs is $100 and price of commodities are as follow: Xi = 4, X2 = 5 a. Use Lagrange Multiplier to determine the optimal production level at this firm. b. What is the meaning of shadow price? How you can interpret it using the solution of part a? 2- Assume the following...
Microeconomics: 1. There are two kinds of goods, food F and shelter S, which are only...
Microeconomics:
1. There are two kinds of goods, food F and shelter S, which are only available in non-negative quantities. Ann's utility from consuming bundle (F, S) is given by the function U(F, S) = F0.690.2. Bob's utility from consuming bundle (F, S) is given by the function V(F, S) = F0.75 0.25 PF (a) (Time: 1 minute) What is Ann's utility level from bundle (F1, Si) = (1.1)? What about Bob's utility level? What is Ann's utility level from...
Marge has the utility function U(F,H)=20F2H where F is the quantity of footwear and H...
Marge has the utility function U(F,H)=20F2H where F is the quantity of footwear and H is the quantity of hats she consumes. Suppose the price of footwear is $20 and the price of hats is $5, while Marge has an income of $200/week. Calculate Marge's MRS as a function of the quantities F and H. (2 points) BONUS: Write down the Lagrangian function for Marge's utility maximization problem. (2 points) Solve for Marge's optimal consumption bundle of footwear and...
1. (24 total points) Suppose a consumer’s utility function is given by U(X,Y) = X1/2*Y1/2. Also,...
1. (24 total points) Suppose a consumer’s utility function is given by U(X,Y) = X1/2*Y1/2. Also, the consumer has $72 to spend, and the price of Good X, PX = $4. Let Good Y be a composite good whose price is PY = $1. So on the Y-axis, we are graphing the amount of money that the consumer has available to spend on all other goods for any given value of X. a) (2 points) How much X and Y...
Question 2 (20 points) A consumer purchases two goods x ano y. The consumer's income is...
Question 2 (20 points) A consumer purchases two goods x ano y. The consumer's income is I. His utility 18 * and y. Px is the price of x. Py is the price of Is 1. His utility is given by U(x,y) = xy a) Calculate consumer's optim uncompensated demand) s optimal choice of x and y under his budget. hinc b) Derive the indirect utility function. c) Are these two goods normal goods? Why! d) Derive the expenditure function....
Question 1. Suppose that Bruce cares only about barbecued chicken (B) and fish (F). His utility function is u = 30.470.6. The price of barbecued chicken is $5, and the price of fish is $10. Bruce has a budget of $100. (a) Write down the consumers maximization problem. (b) What are the consumption quantities of B and F that will maximize Bruce's utility?
18. Suppose that Maggie cares only about chai and bagels. Her utility function is U(C,B) C 0.8B 0.2, where C is the number of cups of chai she drinks in a week, and B is the number of bagels she eats in a week. The price of chai is $2, and the price of bagels is S1. Maggie has S300 to spend per week on chai and bagels. a. What is Maggie's utility-maximizing bundle of chai and bagels? Use the...
1- Suppose that a firm producing commodity with the following production function: Y = 20X,X2 Then, assume that the maximum amount the firm can spend on these two inputs is $100 and price of commodities are as follow: Xi = 4, X2 = 5 a. Use Lagrange Multiplier to determine the optimal production level at this firm. b. What is the meaning of shadow price? How you can interpret it using the solution of part a? 2- Assume the following...
Microeconomics:
1. There are two kinds of goods, food F and shelter S, which are only available in non-negative quantities. Ann's utility from consuming bundle (F, S) is given by the function U(F, S) = F0.690.2. Bob's utility from consuming bundle (F, S) is given by the function V(F, S) = F0.75 0.25 PF (a) (Time: 1 minute) What is Ann's utility level from bundle (F1, Si) = (1.1)? What about Bob's utility level? What is Ann's utility level from...
Question 2 (20 points) A consumer purchases two goods x ano y. The consumer's income is I. His utility 18 * and y. Px is the price of x. Py is the price of Is 1. His utility is given by U(x,y) = xy a) Calculate consumer's optim uncompensated demand) s optimal choice of x and y under his budget. hinc b) Derive the indirect utility function. c) Are these two goods normal goods? Why! d) Derive the expenditure function....
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