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A Consumer's Demand for Burgers Suppose that the consumer has income, I = $20, and the...
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...
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...
Suppose that there two goods X and Y, available in arbitrary non- negative quantities (so the...
Suppose that there two goods X and Y, available in arbitrary non- negative quantities (so the the consumption set is R2). The consumer has preferences over consumption bundles that are strongly monotone, strictly convex, and represented by the following (differentiable) utility function: u(x, y)-y+2aVT, where z is the quantity of good X, and y is the quantity of good Y, and a 20 is a utility parameter The consumer has strictly positive wealth w > 0. The price of good...
1. Consider an individual demand function g 100-5P a. Solve for inverse demand. Plot. b. Suppose...
1. Consider an individual demand function g 100-5P a. Solve for inverse demand. Plot. b. Suppose the market consisted of 5 buyers, each having the same individual demand. Find and plot the market demand c. Use the found market demand to determine the price (and quantity) that would maximize sellers revenue (assuming 1 seller). Ililustrate. (Attempt) If the seller's costs were $5 per unit, what would be the seller's profit-maximizing price and quantity? Illustrate your solution. d. 2. Suppose a...
l. A consumer has €100 of income to allocate between chocolate and soda. Chocolate costs per...
l. A consumer has €100 of income to allocate between chocolate and soda. Chocolate costs per unit. (a) Suppose when soda costs 4 per unit, the consumer chooses 20 sodas. Draw the budget constraint and indifference curve to represent this budget and choice. (You can assume that the indifferences curves are regular, ie convex to the origin.) Now the company introduces a deal whereby the price falls to є3.00 if the consumer buys more than 20 sodas. So if the...
Question 1 (3 Points): Assume a consumer has current-period income y = 120, future-period income y'...
Question 1 (3 Points): Assume a consumer has current-period income y = 120, future-period income y' = 140, current and future taxes t = 20 and t' = 10, respectively, and faces a market real interest rate of r = 0.08, or 8% per period. The consumer has the following preferences over current and future consumption: U(c, c') = min(4c, 3c'). a) (1 points) Determine the consumer's lifetime wealth. b) (2 points) Determine what the consumer's optimal current-period and future-period...
Suppose a consumer has quasi-linear utility: u(x1, x2) = 3.01 + x2. The marginal utilities are...
Suppose a consumer has quasi-linear utility: u(x1, x2) = 3.01 + x2. The marginal utilities are MU(X) = 2x7"! and MU2:) = 1. Throughout this problem, assume P2 = 1. (a) Sketch an indifference curve for these preferences (label axes and intercepts). (b) Compute the marginal rate of substitution. (c) Assume w> . Find the optimal bundle (this will be a function of pı and w). Why do we need the assumption w> (d) Sketch the demand function for good...
Suppose a consumer has income of $100 that she can spend on doctors' visits, which cost...
Suppose a consumer has income of $100 that she can spend on doctors' visits, which cost $20 each or "other goods," which we will represent with a composite good whose price is $1 per unit (i.e,the numeraire). (a) Illustrate her budget constraint The government is considering offering one of the following three health plans to con- sumers. Plan A will simply give everyone an additional $40 of income (perhaps through a tax cut). Under plan B, the government will give...
2. Consider the following demand Qd = 140 - 3P and supply QS = 20 +...
2. Consider the following demand Qd = 140 - 3P and supply QS = 20 + 20P for lunch at the Trump Golf and Country Club. a. Draw the demand and supply curves and calculate the equilibrium price and quantity. b. The government has imposed a sales tax of $2 on restaurant meals. Show how the above market is affected, and the new equilibrium price and quantity. (calculation is necessary). Explain and illustrate how the consumer's welfare is affected. Specifically...
Question 9 1 pts Logan Roy is spending all his money income by buying mineral water...
Question 9 1 pts Logan Roy is spending all his money income by buying mineral water and popcorn. At his current consumption level, the marginal utility of mineral water is 70 and the marginal utility of popcorn is 60. The price of a bottle of mineral water is $2.00 and the price of a box of popcorn is $1.50. The utility-maximizing rule suggests that Logan should: O Increase consumption of popcorn and increase consumption of mineral water Decrease consumption of...
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...
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...
Suppose that there two goods X and Y, available in arbitrary non- negative quantities (so the the consumption set is R2). The consumer has preferences over consumption bundles that are strongly monotone, strictly convex, and represented by the following (differentiable) utility function: u(x, y)-y+2aVT, where z is the quantity of good X, and y is the quantity of good Y, and a 20 is a utility parameter The consumer has strictly positive wealth w > 0. The price of good...
1. Consider an individual demand function g 100-5P a. Solve for inverse demand. Plot. b. Suppose the market consisted of 5 buyers, each having the same individual demand. Find and plot the market demand c. Use the found market demand to determine the price (and quantity) that would maximize sellers revenue (assuming 1 seller). Ililustrate. (Attempt) If the seller's costs were $5 per unit, what would be the seller's profit-maximizing price and quantity? Illustrate your solution. d. 2. Suppose a...
l. A consumer has €100 of income to allocate between chocolate and soda. Chocolate costs per unit. (a) Suppose when soda costs 4 per unit, the consumer chooses 20 sodas. Draw the budget constraint and indifference curve to represent this budget and choice. (You can assume that the indifferences curves are regular, ie convex to the origin.) Now the company introduces a deal whereby the price falls to є3.00 if the consumer buys more than 20 sodas. So if the...
Question 1 (3 Points): Assume a consumer has current-period income y = 120, future-period income y' = 140, current and future taxes t = 20 and t' = 10, respectively, and faces a market real interest rate of r = 0.08, or 8% per period. The consumer has the following preferences over current and future consumption: U(c, c') = min(4c, 3c'). a) (1 points) Determine the consumer's lifetime wealth. b) (2 points) Determine what the consumer's optimal current-period and future-period...
Suppose a consumer has quasi-linear utility: u(x1, x2) = 3.01 + x2. The marginal utilities are MU(X) = 2x7"! and MU2:) = 1. Throughout this problem, assume P2 = 1. (a) Sketch an indifference curve for these preferences (label axes and intercepts). (b) Compute the marginal rate of substitution. (c) Assume w> . Find the optimal bundle (this will be a function of pı and w). Why do we need the assumption w> (d) Sketch the demand function for good...
Suppose a consumer has income of $100 that she can spend on doctors' visits, which cost $20 each or "other goods," which we will represent with a composite good whose price is $1 per unit (i.e,the numeraire). (a) Illustrate her budget constraint The government is considering offering one of the following three health plans to con- sumers. Plan A will simply give everyone an additional $40 of income (perhaps through a tax cut). Under plan B, the government will give...
2. Consider the following demand Qd = 140 - 3P and supply QS = 20 + 20P for lunch at the Trump Golf and Country Club. a. Draw the demand and supply curves and calculate the equilibrium price and quantity. b. The government has imposed a sales tax of $2 on restaurant meals. Show how the above market is affected, and the new equilibrium price and quantity. (calculation is necessary). Explain and illustrate how the consumer's welfare is affected. Specifically...
Question 9 1 pts Logan Roy is spending all his money income by buying mineral water and popcorn. At his current consumption level, the marginal utility of mineral water is 70 and the marginal utility of popcorn is 60. The price of a bottle of mineral water is $2.00 and the price of a box of popcorn is $1.50. The utility-maximizing rule suggests that Logan should: O Increase consumption of popcorn and increase consumption of mineral water Decrease consumption of...
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