I only need answers for e and f. Problem 3: Suppose your utility function (i.e. level...
I only need answers for e and f.
Problem 3: Suppose your utility function (i.e. level of satisfaction from consuming a and b) is given by
?(a, b)=?1/3?2/3
where a represents apple and b represents banana. Your total income
is $500. The price of
apple is $5 and the price of banana is $10.(a) Write your Budget Constraint (BC).(b) Write your Rational Choice (RC).
(c) Find the consumption combination of bananas and apples that maximizes your satisfaction given your budget constraint.
(d) From your answer on (c), what is the utility (or level of satisfaction) that you get?
Now, suppose the price of apple increases to $10.
(e) Find the consumption combination of bananas and apples that maximizes your satisfaction given your new budget constraint. What is your new utility?
Now, suppose your brother can compensate you for the price increase so that your utility is the same as before the price increase.
(f) Find the combination of consumption of bananas and apples that maximizes your satisfaction given your new budget constraint.
I only need answers for e and f.
Homework Answers
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I only need answers for e and f.
Problem 3: Suppose your utility function (i.e. level...
3. Suppose your utility function (e. level of satisfaction from consuming a and b) is given...
3. Suppose your utility function (e. level of satisfaction from consuming a and b) is given by U(a, b)=a 1/32/3 where a represents apple and b represents banana. Your total income is $500. The price of apple is $5 and the price of banana is $10. (a) Write your Budget Constraint (BC). What is the Marginal Rate of Transformation? (b) Find the Marginal Rate of Substitution. (c) Find the consumption combination of bananas and apples that maximizes your utility given...
2. Mike's preferences are represented by the utility function U(A, B) A+2B. He has an income...
2. Mike's preferences are represented by the utility function U(A, B) A+2B. He has an income of $20. Consider each of the following combination of prices of goods. On the same graph, (i) graph a family of indifference curves for the consumer, (ü) graph the budget lines for each combination of prices, (i cakculate and label the optimal consumption choice(s) for each combination of prices, and (iv) cakulate the utility Mike derives from consuming the optimal consumption choice. bananas 20...
2. Mike's preferences are represented by the utility function U(A, B) A+2B. He has an income...
2. Mike's preferences are represented by the utility function U(A, B) A+2B. He has an income of S20. Consider each of the following combination of prices of goods. On the same graph, (i) graph a family of indifference curves for the consumer, (ii) graph the budget lines for each combination of prices, (iii) calculate and label the optimal consumption choice(s) for each combination of prices, and (iv) calculate the utility Mike derives from consuming the optimal consumption choice. bananas 20...
2. Mike's preferences are represented by the utility function U(A, B)- A+2B. He has an income...
2. Mike's preferences are represented by the utility function U(A, B)- A+2B. He has an income of $20. Consider each of the following combination of prices of goods. On the same graph, (i) graph a family of indifference curves for the consumer, (ii) graph the budget lines for each combination of prices, (iii) calculate and label the optimal consumption choice(s) for each combination of prices, and (iv) calculate the utility Mike derives from consuming the optimal consumption choice bananas (a)...
1. Suppose a consumer is maximizing utility consuming a bundle apples and bananas x and has...
1. Suppose a consumer is maximizing utility consuming a bundle apples and bananas x and has standard preferences. Her budget constraint is given by the equation 1000-2a-2b0. Apples are normal goods and bananas are normal. a) plot the optimal bundle, showing the proper indifference curve and budget constraint. Call this bundle x1 b) show the effect of an increase of a single price increase for apples on the budget constraint. Use a hypothetical budget line to identify substitution effects for...
Diana's utility function for consuming apples (Xa) and Bananas (Xb) is U(Xa,Xb) = XaXb. Suppose the...
Diana's utility function for consuming apples (Xa) and Bananas (Xb) is U(Xa,Xb) = XaXb. Suppose the prices of apples is $1, bananas $2, and her income is $40. On a graph with bananas on the y-axis, use blue ink to draw Bianca’s budget line.With red ink, plot an indifference curve that gives her a utility level of 150. Using black ink, plot an indifference curve that gives her a utility level of 300. Can Bianca afford any bundles that give...
4. Suppose a consumer's utility from consuming bananas is described by the function: U(B) = 10B...
4. Suppose a consumer's utility from consuming bananas is described by the function: U(B) = 10B + 3B2 B3 Answer the following questions about this consumer's banana consumption: (a) Write down a mathematical relationship to describe the value to this consumer from eating an additional banana? (b) Make a table showing total and marginal utility for banana consumption from 0 to 9 bananas. (C) Would this individual ever choose to consume more than 7 bananas? Explain. 5. For each of...
3. Suppose a consumer's utility function is given by U(A,B) In(A)+In(B). Suppose the price of each...
3. Suppose a consumer's utility function is given by U(A,B) In(A)+In(B). Suppose the price of each apple A) is є2, and the price of a loaf of bread (B) is є2 and the consumer's income was €40. (i) Find the marginal utility of apples and the marginal utility of bread and use these to determine if the ii) Write down the Lagrangian for this problem and solve for the optimal consumption of apples and iii) Report and interpret your solution...
Problem 2 Suppose that Prof. Wu faces three consumption bundles A-1 apples,3 bananas), . B (3...
Problem 2 Suppose that Prof. Wu faces three consumption bundles A-1 apples,3 bananas), . B (3 apple, 2 bananas), . C (4 apples, 2 bananas) Assume that Prof. Wu prefers C to B and he is indifferent between Λ and B 1) If Prof. Wu is rational, what additional conditions you need to impose on Prof. Wu's pref erences? Explain why after adding those conditions, we can say Prof. Wu is rational 2) Depict the three consumption bundles on a...
3. Suppose a consumer's utility function is given by U(A, B) In(A)+In(B). Suppose the price of...
3. Suppose a consumer's utility function is given by U(A, B) In(A)+In(B). Suppose the price of each apple (A) is €6, and the price of a loaf of bread (B) Is €6 and the consumer's income is €120 ) Write down the Lagrangian for this problem and solve for the optimal consumption of apples and (ii) Report and interpret your solution for the Lagrange multiplier. bread. i) Evaluate the marginal utility of bread and the marginal utility of apples at...
3. Suppose your utility function (e. level of satisfaction from consuming a and b) is given by U(a, b)=a 1/32/3 where a represents apple and b represents banana. Your total income is $500. The price of apple is $5 and the price of banana is $10. (a) Write your Budget Constraint (BC). What is the Marginal Rate of Transformation? (b) Find the Marginal Rate of Substitution. (c) Find the consumption combination of bananas and apples that maximizes your utility given...
2. Mike's preferences are represented by the utility function U(A, B) A+2B. He has an income of $20. Consider each of the following combination of prices of goods. On the same graph, (i) graph a family of indifference curves for the consumer, (ü) graph the budget lines for each combination of prices, (i cakculate and label the optimal consumption choice(s) for each combination of prices, and (iv) cakulate the utility Mike derives from consuming the optimal consumption choice. bananas 20...
2. Mike's preferences are represented by the utility function U(A, B) A+2B. He has an income of S20. Consider each of the following combination of prices of goods. On the same graph, (i) graph a family of indifference curves for the consumer, (ii) graph the budget lines for each combination of prices, (iii) calculate and label the optimal consumption choice(s) for each combination of prices, and (iv) calculate the utility Mike derives from consuming the optimal consumption choice. bananas 20...
2. Mike's preferences are represented by the utility function U(A, B)- A+2B. He has an income of $20. Consider each of the following combination of prices of goods. On the same graph, (i) graph a family of indifference curves for the consumer, (ii) graph the budget lines for each combination of prices, (iii) calculate and label the optimal consumption choice(s) for each combination of prices, and (iv) calculate the utility Mike derives from consuming the optimal consumption choice bananas (a)...
1. Suppose a consumer is maximizing utility consuming a bundle apples and bananas x and has standard preferences. Her budget constraint is given by the equation 1000-2a-2b0. Apples are normal goods and bananas are normal. a) plot the optimal bundle, showing the proper indifference curve and budget constraint. Call this bundle x1 b) show the effect of an increase of a single price increase for apples on the budget constraint. Use a hypothetical budget line to identify substitution effects for...
4. Suppose a consumer's utility from consuming bananas is described by the function: U(B) = 10B + 3B2 B3 Answer the following questions about this consumer's banana consumption: (a) Write down a mathematical relationship to describe the value to this consumer from eating an additional banana? (b) Make a table showing total and marginal utility for banana consumption from 0 to 9 bananas. (C) Would this individual ever choose to consume more than 7 bananas? Explain. 5. For each of...
3. Suppose a consumer's utility function is given by U(A,B) In(A)+In(B). Suppose the price of each apple A) is є2, and the price of a loaf of bread (B) is є2 and the consumer's income was €40. (i) Find the marginal utility of apples and the marginal utility of bread and use these to determine if the ii) Write down the Lagrangian for this problem and solve for the optimal consumption of apples and iii) Report and interpret your solution...
Problem 2 Suppose that Prof. Wu faces three consumption bundles A-1 apples,3 bananas), . B (3 apple, 2 bananas), . C (4 apples, 2 bananas) Assume that Prof. Wu prefers C to B and he is indifferent between Λ and B 1) If Prof. Wu is rational, what additional conditions you need to impose on Prof. Wu's pref erences? Explain why after adding those conditions, we can say Prof. Wu is rational 2) Depict the three consumption bundles on a...
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