Margot the octopus has 5 right and 3 left legs. She is crazy about shoes and will only wear matching shoes on all her 8 legs. Her utility function is given by U(q1,92) = min[3q1,5q2], where q₁ is the number of right shoes, and q2 is the number of left shoes. Assume that Margot's income is I = $70, and the prices of the right and left shoes are p₁=$4 and p2=$5, respectively. a) Draw the budget line for Margot and several of her indifference curves. Put the right

Margot the octopus has 5 right and 3 left legs. She is crazy about shoes and will only wear matching shoes on all her 8 legs. Her utility function is given by U(q1,92) = min[3q1,5q2], where q₁ is the number of right shoes, and q2 is the number of left shoes. Assume that Margot's income is I = $70, and the prices of the right and left shoes are p₁=$4 and p2=$5, respectively. a) Draw the budget line for Margot and several of her indifference curves. Put the right

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 3SQP

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Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either call her on the land-line phone for five cents per minute or he can drive to see her, at a roundâ€”trip cost of 2 in gasoline money. He has a total of 10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses a handy utilimometer that measures his total utility from personal visits and from phone minutes. Using the values in Table 6.6, figure out the points 011 Jeremys consumption choice budget constraint (it may be helpful to do a sketch) and identify his utility-maximizing point.
Please no written by hand and no emage Consider a consumer that consumes 2 teaspoons of sugar with each cup of coffee. For each cup of coffee with sugar the consumer gains 10 utils.a) Write down the utility function that gives the total utility if the consumer consumes S teaspoons of sugar and C cups of coffee. The consumer has assigned £7 per week to be spent on drinking coffee with sugar. The current price of coffee is £0.50 per cup and each spoon of sugar costs £0.10. b) Calculate the optimal weekly consumption bundle for this consumer.c) Does the consumer view C and S as complements or substitutes?
abby is a single mom with a weekly budget of $100. She can spend her weeklyincome on food and diapers for her son. Price of food is $1 and price of a diaperis 50 cents. Her son needs at least 5 diapers a day, therefore she must purchaseat least 35 diapers weekly. Jennifer’s utility function is U (f, d) = f 0.9d0.1,where f and d represent quantity of food and diapers, respectively.Question 1 Part aFind abbys optimal consumption bundle. Make sure to draw her budgetconstraint and indifference curves and clearly demonstrate your solution.
48 aces How big would that budget have to be before he would spend a dollar buying a first cup of coffee? Instructions: Enter your answer as a whole number. here to search Suppose that Omar's marginal utility for each additional cup of coffee is 2.5 utils per cup no matter how many cups he drinks. On the other hand, his marginal utility per doughnut is 10 for the first doughnut he eats, 9 for the second he eats, 8 for the third he eats, and so on (that is, declining by 1 util per additional doughnut). In addition, suppose that coffee costs $1 per cup, doughnuts cost $1 each, and Omar has a budget that he can spend only on doughnuts, coffee, or both. O Saved II Help 4 Saw
8. Jane lives in a dormitory that offers soft drinks and chips for sale in vending machines. Her utility function is U 3SC (where S is the number of soft drinks per week and C the number of bags of chips per week), so her marginal utility of S is 3C and her marginal utility of C is 3S. Soft drinks are priced at £0.50 each, chips £0.25 per bag. a. Write an expression for Jane's marginal rate of substitution between soft drinks and chips. b. Use the expression generated in part (a) to determine Jane's optimal mix of soft drinks and chips. c. If Jane has £5.00 per week to spend on chips and soft drinks, how many of each should she purchase per week?
The table shows the total utility (TU) that James receives from consuming different amounts of two goods X and Y, per month. Quantity TUx MUx MUx/Px TUy MUy MUy/Py 0 0 0 0 0 0 0 1 50 50 16.67 75 75 25.00 2 88 38 12.67 117 42 14.00 3 121 33 11.00 153 36 12.00 4 150 29 9.67 181 28 9.33 5 175 25 8.33 206 25 8.33 6 196 21 7.00 225 19 6.33 7 214 18 6.00 243 18 6.00 8 229 15 5.00 260 17 5.67 9 241 12 4.00 276 16 5.33 d.How much total utility will James experience by buying the utility-maximizing combination? e.Suppose the price of good Y increases to $6. How many units of X and Y will he buy to maximize his utility now?
1. * Refer to the information provided in table below. MU/P for Number of Cinema Tickets Total Utility Marginal Utility Price of a Cinema Ticket Cinema Tickets 140 240 3 330 400 440 6. 470 MU/P for Number of Concert Tickets Total Utility Marginal Utility Price of a Concert Ticket Concert Tickets 240 440 3 600 720 800 6. 850 If the price of a cinema ticket is 20 TL, the price of a concert ticket is 40 TL and the a. income is 120 TL, draw the budget line. b. Find marginal utility for each consumption level for both products and show your work in Table. Find the utility maximizing level of consumption bundle if the income of the C. consumer is 120 TL. Show the utility maximizing level of consumption for each product on the table. Explain your answer by stating the utility maximizing rule.
Question 2 David spends his budget on chocolate and chip. His utility function is given by ?(?1,?2)= 2?1?2, where ?1 is the number of chocolates he consumers per week, and ?2 is the number of chips he buys per week. A chocolate costs 10 SEK, and a chip costs 20 SEK. David’s weekly budge for consuming on these two goods is 120 SEK. (1) What is David’s budge line? Draw the budget line on a graph with chocolate amounts on the horizontal axis and chip amounts on the vertical axis. Write explicitly at which points budget line crosses the axis. (2) What is David’s marginal utilities for the two goods, respectively? What is his marginal rate of substitution between the two goods? (3) What is David’s optimal choice? Calculate the numerical answer for the optimal bundle. Also draw an indifference curve for David on the same graph as question(1) and show the optimal bundle.
Alexi has a budget of $21 to spend on toaster and breads. He does not directly gain any utility from owining a toaster but for every slice of toasted bread he consumes he gain 2 units of utility, that is if he owns a toaster. Without the toaster, he gain 0 units of utility from consuming plain bread. Suppose the toaster has inferior quality and will break after toasting only 10 slices, then Alexi needs to buy a new one. The current market price for cheap toaster is $5 and the price for a single slice of bread is $1. Assume that Alexi aims to maximize consumer surplus. Find Alexi's income-consumption curve for slices of bread for incomes between $0 and $21, assuming a price of $1 per slice.
2. Eren's two main hobbies are taking vacations overseas (V) and eating expensive meals (M). His utility function is given as: U(V,M) = V²M Last year, the average price of taking a vacation overseas was US$200 and the average price of an expensive meal is $50. However, due to supply problems in Onions, the average price of an expensive meal rose to $75. The average price of a vacation did not change. His income, which is $1500, did not change. a. b. C. Calculate the change in consumer surplus from consuming the expensive meals considering the price change (Hint: you need to compare his optimal consumption bundle before and after the price change to get the change in CS). Suppose that the Department of Welfare wants to know how much should be given to Eren to offset his change un utility due to the price increase of an expensive meal. Calculate the compensative variation (CV). Calculate for the equivalent variation (EV) for the price change.
maddy is a single mom with a weekly budget of $100. She can spend her weeklyincome on food and diapers for her son. Price of food is $1 and price of a diaperis 50 cents. Her son needs at least 5 diapers a day, therefore she must purchaseat least 35 diapers weekly. maddy utility function is U (f, d) = f 0.9d0.1,where f and d represent quantity of food and diapers, respectively.Part aFind Jennifer’s optimal consumption bundle. Make sure to draw her budgetconstraint and indifference curves and clearly demonstrate your solution.Part bmaddy uncle Sam, who is aware of her financial troubles, offers to help herout. Specifically, he offers to pay half of her weekly diaper expenses. Howmany diapers maddy would buy now? Again, demonstrate your solution bothgraphically and analytically.
I like drinking Smirnoff and Stoli Vodka, but I really only careabout the total amount of alcohol I get out of it. They areperfect substitutes. Smirnoff is sold in liter bottles that are100 proof (that’s 50% alcohol). Stoli is sold in liter bottlesthat are 80 proof (40% alcohol). What is my utility functionfor bundles of these two vodkas? What do my indifferencecurves look like?