Question

18.

Researchers have investigated the preferences over dinner and they have found that they take the following form:

U = - 68 Chicken + 21 Steak + 4 Fish - 43 Costs

Costs= cost in dollars of the dinner
Chicken= amount of chicken in pounds
Steak= amount of steak in pounds
Fish= amount of fish in pounds

Given this information, how many pounds of fish is the consumer willing to give up to obtain one more pound of steak during dinner? (hint: use MRS(steak, fish) but enter your answer as a positive number)

19. If the ulitity function is: U=86x₁ + 14x₂

If x₁=44, how much of x₂ does the consumer has to consume to obtain a utility level of 6,159?

Answer 1

18. MRS(steak, fish) = -Marginal utility of steak/Marginal utility of fish = (entering positive number only)

So, the consumer is willing to give up 5.25 pounds of fish to obtain one more pound of steak during dinner.

19. U = 86x₁ + 14x₂ = 6159

When x₁= 44,
86(44) + 14x₂ = 6159
So, 3784 + 14x₂ = 6159
So, 14x₂ = 6159 - 3784 = 2375
So, x₂ = 2375/14 = 169.64

Thus, x₂ = 169.64