Homework Answers
The utility theory says that as a perosn conusmes more of a good, the satisfaction that he derives from additional consumption keeps on decreasing so even if Jill likes lobsters, she would not eat it in every meal as the utility keeps on decreasing with every additional consumption.
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12. Jill likes lobsters, but she does not eat lobsters in every meal. How can utility...
1. Consumer choice problems: (a) Paul likes to eat lunch at school. He only likes Twinkies...
1. Consumer choice problems: (a) Paul likes to eat lunch at school. He only likes Twinkies (t) and soda (s), and these provide him a utility of u(t, s) = √(ts). If Twinkies cost $0.10 each and soda costs $0.25 per cup, how should Paul spend the $1 his mother gives him every day? (b) George likes breakfast tacos and milk. His utility is given by u(t, m) = t + 5 ln(m). Suppose tacos and milk both cost $1...
Clara’s utility function is U = xAxB. (a) She likes consuming 10 apples and 10 bananas...
Clara’s utility function is U = xAxB. (a) She likes consuming 10 apples and 10 bananas as much as consuming 1 apple and how many bananas? (b) Does this mean her preferences violate the assumption of convexity (prefer averages to extremes)?
Jackie likes pre-packaged and processed food since she is busy and it saves her time in...
Jackie likes pre-packaged and processed food since she is busy and it saves her time in meal preparation, but she has recently realized that eating pre-packaged and processed food increases her risk of various health problems. Her health-conscious friend estimates that if Jackie continues to eat pre-packaged and processed food, her medical expenses will be $4,000 per year, but if she switches to healthy food, she can reduce her medical expenses to $2,000 per year. Assume that healthy food costs...
Stubborn Steve likes to eat lunch at noon. He also likes to save money so he...
Stubborn Steve likes to eat lunch at noon. He also likes to save money so he can buy other goods and services. He does thi by attending "early bird specials" and "late lunchers" programs offered by his favorite local diner. Steve has $R a day to spend on lunch and other stuff. Lunch at noon costs $L. If he delays lunch until t hours after noon, he is able to buy his lunch for a price of SL-t. Similarly if...
Peter pays $9.99 for an all-you-can eat pizza buffet. How would you predict the number of...
Peter pays $9.99 for an all-you-can eat pizza buffet. How would you predict the number of pizzas that Peter will eat using utility theory?
Write a utility function for the following individuals: a) Miss Muffett likes curds (x) and whey...
Write a utility function for the following individuals: a) Miss Muffett likes curds (x) and whey (v) and is always willing to give up one cup of b) Jack Sprat can eat no fat (x) but he can always give it to his wife. She gives him lean (v), c) King Cole likes to smoke a pipe, but is very particular about the blend of tobacco he uses. (taken from the Nicholson Workbook) curds for ten fluid ounces of whey....
10.1 Utility Maximization Question Friday, Aprl 21, 3017 03 PM Each week, Jen likes to drink coffee and eat bagels i...
10.1 Utility Maximization Question Friday, Aprl 21, 3017 03 PM Each week, Jen likes to drink coffee and eat bagels in the morning either at work or at home on the weekends. Figure 1 lists the total utility that she receives at each quantity of cups of coffee and bagels, respectively. Additionally, Jen has a weekly budget of $12 to spend on consuming cups of coffee and bagels (and she always spends her whole coffee/bagel budget otherwise she gets grumpy!)....
3.2) (10 points) Jane likes to have Tea (T) with Cookies (C). She always has 4...
3.2) (10 points) Jane likes to have Tea (T) with Cookies (C). She always has 4 cookies for every cup of tea. 3.2a) (points) Draw 2 indifference curves that describe her preferences with Cookies (C) on the horizontal axis and Tea (T) on the vertical axis. 3.2b) (3 points) What is her utility function that would represent her preferences? • Her utility function: UCT) - 3.2c) (4 points) If the price of a cup of tea, Py = $2 and...
Number of Cookies Total Utility Marginal Utility Number of Pretzels Total Utility Marginal Utility 30 30...
Number of Cookies Total Utility Marginal Utility Number of Pretzels Total Utility Marginal Utility 30 30 Hide commants V 2) Suppose you have a budget of $8 and cookies and pretzels cost $1 each. What is the utility maximizing combination of cookies and pretzels? How much total utility does the consumer receive? 3) Suppose the price of cookies rises to $1.50, and the price of pretzels remains the same. What is the new utility maximizing combination of cookies and pretzels?...
Cynthia's husband is away Monday through Friday, and she does not know how to cook. If...
Cynthia's husband is away Monday through Friday, and she does not know how to cook. If every evening she dines at one of her 8 favorite restaurants randomly, and during that period she dines at a restaurant at most once, what is the probability that, one evening she will eat at Wilbraham Pizzeria, one of her favorites?
Stubborn Steve likes to eat lunch at noon. He also likes to save money so he can buy other goods and services. He does thi by attending "early bird specials" and "late lunchers" programs offered by his favorite local diner. Steve has $R a day to spend on lunch and other stuff. Lunch at noon costs $L. If he delays lunch until t hours after noon, he is able to buy his lunch for a price of SL-t. Similarly if...
Write a utility function for the following individuals: a) Miss Muffett likes curds (x) and whey (v) and is always willing to give up one cup of b) Jack Sprat can eat no fat (x) but he can always give it to his wife. She gives him lean (v), c) King Cole likes to smoke a pipe, but is very particular about the blend of tobacco he uses. (taken from the Nicholson Workbook) curds for ten fluid ounces of whey....
10.1 Utility Maximization Question Friday, Aprl 21, 3017 03 PM Each week, Jen likes to drink coffee and eat bagels in the morning either at work or at home on the weekends. Figure 1 lists the total utility that she receives at each quantity of cups of coffee and bagels, respectively. Additionally, Jen has a weekly budget of $12 to spend on consuming cups of coffee and bagels (and she always spends her whole coffee/bagel budget otherwise she gets grumpy!)....
3.2) (10 points) Jane likes to have Tea (T) with Cookies (C). She always has 4 cookies for every cup of tea. 3.2a) (points) Draw 2 indifference curves that describe her preferences with Cookies (C) on the horizontal axis and Tea (T) on the vertical axis. 3.2b) (3 points) What is her utility function that would represent her preferences? • Her utility function: UCT) - 3.2c) (4 points) If the price of a cup of tea, Py = $2 and...
Number of Cookies Total Utility Marginal Utility Number of Pretzels Total Utility Marginal Utility 30 30 Hide commants V 2) Suppose you have a budget of $8 and cookies and pretzels cost $1 each. What is the utility maximizing combination of cookies and pretzels? How much total utility does the consumer receive? 3) Suppose the price of cookies rises to $1.50, and the price of pretzels remains the same. What is the new utility maximizing combination of cookies and pretzels?...
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