3. Jo spends all her money on records. She only considers buying disco and classic rock, and she is always willing to give up two classic rock for one disco record.
a. Create a utility function describing Jo’s preferences.
b. Sketch an indifference curve showing bundle giving her the same utility as when she has 4 disco and 4 classic rock records.
c. A disco record costs $25 and a rock record $10. If Jo has $140 how what is her optimal bundle? As always, show you work/explain your reasoning.
d. Add Jo’s budget line to your graph in part b.
3. Jo spends all her money on records. She only considers buying disco and classic rock,...
3. Keiko spends all her money on airtime for her mobile phone and gasoline for her car. Her preferences correspond to the utility function U(G,W) = W+ 20/G, where G stands for gallons of gasoline and W stands for mobile (wireless) minutes used in a week. (Remember, for that utility function, the marginal utility of gasoline is 10/VG, and the marginal utility of mobile minutes is 1.) Keiko can spend S40 and mobile minutes cost $0.50 per minute. Suppose the...
(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?...
Assume that Jean has an annual income of $50,000, and she spends her income on milk (X) and all other goods (AOG) (Y). The price of milk is $2, and the price of AOG is $1/unit. Her preferences can be represented by convex indifference curves. a. (4 pts) Illustrate her optimal choice (X*,Y*) on a graph, using indifference curve-budget line analysis. (Note: you do not have enough information to have numerical answers for X* and Y*). b. (11 pts) In...
. (15 marks) Rajan spends all his money on only two goods, bananas and scones. Bananas cost $0.60/kg, and scones $0.50 each (assume he can purchase partial scones). (1) Sketch Rajan's budget constraint if he has an income of $20/day. (Put bananas on the horizontal axis.) Rajan has well-behaved preferences[1], and his optimal bundle contains 20 scones. b) (2) Illustrate his optimal bundle in your diagram for (a); label it A. Why is this choice optimal? What conditions does it satisfy? (2)...
Assume that Jean has an annual income of $50,000, and she spends her income on milk (X) and all other goods (AOG) (Y). The price of milk is $2, and the price of AOG is $1/unit. Her preferences can be represented by convex indifference curves. a. (4 pts) Illustrate her optimal choice (X*,Y*) on a graph, using indifference curve-budget line analysis. (Note: you do not have enough information to have numerical answers for X* and Y*). b. (11 pts) In...
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...