Question Set 1 A) When Jo makes egg sandwiches, he uses exactly 2 eggs (E) and...
When Jo makes egg sandwiches, he uses exactly 2 eggs (E) and 2 slices of bread (S) in each sandwich, for a utility of 7. What type of utility curve would this be? What would be Jo’s utility function and marginal utilities? Graph indifference curves for utilities of 7 and 14.
2) Answer the following: a) When the price of sand increased by 10% this winter, stores starting stocking and selling 3% more sand. Calculate and interpret this elasticity. How price sensitive are these stores and why? b) When Windy’s increased the price of their ice cream by 2%, sales of fries decreased by 4%. Calculate the appropriate elasticity and explain the relationship between ice cream and fries at Windy’s.
Italian Sub Italian Sub Taco Taco Taco Quantity MU MU MU/$4 10 MU/$2 15 MU/$1 30 40 30 2 32 8 24 12 8 24 16 3 20 16 12 - 12 - 5 3 1.5 0.5 5 6 6 2 8 4 6 4 2 12 8 4 - Refer to the table, which lists the values of Harry Taber's marginal utility and marginal utility per dollar for Italian submarine (sub) sandwiches and tacos. Assume that the price of...