Suppose that a consumer consumes only food(F) and entertainment(E). Suppose PF = $5, PE = $10,...
Suppose that a consumer consumes only food(F) and entertainment(E). Suppose PF = $5, PE = $10, I = $600. Suppose the utility function is u(F, E) = F E.
(a) Find the optimal bundle.
(b) Suppose now that the consumer has to have a minimum of 50 units of F, and a maximum of 20 units of E. Draw the new budget constraint and find the new optimal bundle.
Homework Answers
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Suppose that a consumer consumes only food(F) and
entertainment(E). Suppose PF = $5, PE = $10,...
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...
Suppose all families have utility from food (F) and from money spent on other items (M)...
Suppose all families have utility from food (F) and from money spent on other items (M) equal to U(F, M) = 10ln(F) + M. Suppose also that the unit price of food is PF = 1 and money spent on other items is measured in dollars so that PM = 1. Consider families with a steady daily income of $25. We will label this type of family as “middle income”. a) Using the Lagrangian method, find the optimal daily bundle...
Consider a consumer with a utility function u(x1, x2) = min{21, 222}. Suppose the prices of...
Consider a consumer with a utility function u(x1, x2) = min{21, 222}. Suppose the prices of good 1 and good 2 are p1 = P2 = 4. The consumer's income is m = 120. (a) Find the consumer's preferred bundle. (b) Draw the consumer's budget line. (c) On the same graph, indicate the consumer's preferred bundle and draw the indifference curve through it. (d) Now suppose that the consumer gets a discount on good 1: each unit beyond the 4th...
Long Question #2 Consider preferences over food and housing represented by the utility function U F2/3H1/3...
Long Question #2 Consider preferences over food and housing represented by the utility function U F2/3H1/3 A. Let Income 1200, PE 2 and PH6. Find the quantity demanded of housing and food. Graph the budget constraint and the optimal bundle that you found. Make sure to include an indifference curve. Let the price of food increase to 4. Add the new budget constraint, find the new optimal bundle and add it to your graph. B.
Question 1: Louis the retired Canadian lives on a fixed budget and consumes only two goods:...
Question 1: Louis the retired Canadian lives on a fixed budget and consumes only two goods: toques (T) and maple syrup (M). Suppose Louis monthly budget is 100 and the price of the two goods are (PT,PM) (4,2). (a) Make a properly labeled diagram illustrating Louis'budget constraint with T on the hori- zontal axis and M on the vertical axis. Indicate the area corresponding to the set of bundles (M, T) that Louis can afford. (b) What is the maximum...
(38pts) Suppose a consumer spends all of her income on only two goods, z and y. Her preferences o...
(38pts) Suppose a consumer spends all of her income on only two goods, z and y. Her preferences over these two goods are represented by the utility function u(r,y) min(, 4y). The price of good y is given to be S8. Her income and price of z are represented by m and ps, respectively. (a) (10 pts) Find the demand for good z as a function of m and pa. (b) (5 pts) Is good z ordinary or Giffen good?...
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...
Suppose a consumer has budget of $120 per week to spend on food. Consumer can choose...
Suppose a consumer has budget of $120 per week to spend on food. Consumer can choose to eat at restaurants (R), in which case he spends about $20 per meal (P $20), or spend his money on All-Other-Food (PAOP $1) 2. a. Ilustrate consumer's budget line. Plot R on the horizontal axis. b. If consumer's utility function is U-R AOF, what will be his optimal bundle? What would be the value of his utility at optimal bundle? How much money...
Nora consumes only two goods (food and clothing) and her preferences for these goods can be...
Nora consumes only two goods (food and clothing) and her preferences for these goods can be represented by the following utility function UF,C=F2C where F is the quantity of food consumed and C is the amount of clothing consumed respectively. Suppose Nora’s allocated monthly income on the two goods is $M and the prices of the two goods (food and clothing) she prefers are $PF for food and $PC for clothing. Using the above information write Nora’s utility maximization problem...
Please consider an individual that consumes two goods – Food (F) and Clothing (C) – and...
Please consider an individual that consumes two goods – Food (F) and Clothing (C) – and has a Cobb- Douglas Utility Function of the form U= 10 F^(2/3)* C^(1/3) a) Write the functions for the demand curves for Food and Clothing b) What is the maximum utility that can be attained when Income=1000, Pf = 5 and Pc = 20? c) What is the minimum expenditure necessary to attain Utility = 500?
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...
Consider a consumer with a utility function u(x1, x2) = min{21, 222}. Suppose the prices of good 1 and good 2 are p1 = P2 = 4. The consumer's income is m = 120. (a) Find the consumer's preferred bundle. (b) Draw the consumer's budget line. (c) On the same graph, indicate the consumer's preferred bundle and draw the indifference curve through it. (d) Now suppose that the consumer gets a discount on good 1: each unit beyond the 4th...
Long Question #2 Consider preferences over food and housing represented by the utility function U F2/3H1/3 A. Let Income 1200, PE 2 and PH6. Find the quantity demanded of housing and food. Graph the budget constraint and the optimal bundle that you found. Make sure to include an indifference curve. Let the price of food increase to 4. Add the new budget constraint, find the new optimal bundle and add it to your graph. B.
Question 1: Louis the retired Canadian lives on a fixed budget and consumes only two goods: toques (T) and maple syrup (M). Suppose Louis monthly budget is 100 and the price of the two goods are (PT,PM) (4,2). (a) Make a properly labeled diagram illustrating Louis'budget constraint with T on the hori- zontal axis and M on the vertical axis. Indicate the area corresponding to the set of bundles (M, T) that Louis can afford. (b) What is the maximum...
(38pts) Suppose a consumer spends all of her income on only two goods, z and y. Her preferences over these two goods are represented by the utility function u(r,y) min(, 4y). The price of good y is given to be S8. Her income and price of z are represented by m and ps, respectively. (a) (10 pts) Find the demand for good z as a function of m and pa. (b) (5 pts) Is good z ordinary or Giffen good?...
Suppose a consumer has budget of $120 per week to spend on food. Consumer can choose to eat at restaurants (R), in which case he spends about $20 per meal (P $20), or spend his money on All-Other-Food (PAOP $1) 2. a. Ilustrate consumer's budget line. Plot R on the horizontal axis. b. If consumer's utility function is U-R AOF, what will be his optimal bundle? What would be the value of his utility at optimal bundle? How much money...
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