Homework Answers
Ans. The optimal quantities of both goods would be at a point where ( MU of Juice / Price of Juice ) / (MU of Plane Tickets / Price of Plane Tickets )
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Consider two goods, plane tickets and juice. Suppose Yvette is to choose the optimal quantities of...
Yvette enjoys consuming both milk and juice. Each glass of milk costs PMS1, and each glass...
Yvette enjoys consuming both milk and juice. Each glass of milk costs PMS1, and each glass of juice costs P$2. Suppose that Yvette buys 300 glasses of milk and 200 glasses of juice per year. The following graphs show her marginal utility curves for milk and juice. At her current consumption level, Yvette's marginal utility from consuming the last glass of milk she bought is MUM = 30 utils per glass, and her marginal utility from consuming the last glass...
Finding the optimal combination of two goods Eleanor enjoys consuming both guacamole and salsa.
Eleanor enjoys consuming both guacamole and salsa. Each jar of guacamole costs PG=$1PG=$1, and each jar of salsa costs PS=$2PS=$2. Suppose that Eleanor buys 300 jars of guacamole and 200 jars of salsa per year. The following graphs show her marginal utility curves for guacamole and salsa. At her current consumption level, Eleanor's marginal utility from consuming the last jar of guacamole she bought is MUG=30MUG=30 utils per jar, and her marginal utility from consuming the last jar of salsa she bought is MUS=30MUS=30 utils per...
2. Total and marginal utility Yakov enjoys drinking milk, since his mother tells him it will...
2. Total and marginal utility Yakov enjoys drinking milk, since his mother tells him it will make him grow up strong. The following table contains information on Yakov's utility from milk each day. FW in the two missing cells of the table. Milk (Glasses) Total Utility (Utils) Marginal Utility (Utils per glass) 200 210 On the following graph, use the purple points (diamonds symbol) to plat Yakov's total utility (TU) curve if he consumes zero, one, two, three, four, five,...
Assume that Clark spends his entire income on the purchase of two goods, X and Y....
Assume that Clark spends his entire income on the purchase of two goods, X and Y. If his income and the prices of good X and Y all double, Clark will double the purchase of goods X and Y buy more of good X and less of good Y buy less of good X and more of good Y buy less of both goods X and Y buy the same amounts of goods X and Y According to the law...
9. The logic of price discrimination Aa Aa Consider the market for airline tickets on Trans-America...
9. The logic of price discrimination Aa Aa Consider the market for airline tickets on Trans-America Airlines from Los Angeles to Philadelphia. The following graph shows the demand curve, marginal revenue (MR) curve, and marginal cost (MC) curve for this particular flight In particular, the cost of adding another passenger to an otherwise empty seat is constant at $80. For simplicity, assume throughout this question that there are no supply constraints owing to seating capacity and assume that there are...
Is Alyssa currently maximizing her utility? 0 O No; she could buy less fruit and more...
Is Alyssa currently maximizing her utility? 0 O No; she could buy less fruit and more cheese, not spend any more money, and be better off. 0 O Yes; the marginal utility she receives from her last pound of cheese equals that of her last pound of fruit. 0 O No; she likes fruit and cheese more than other goods, so she should buy more of both. No; she could buy more fruit and less cheese, not spend any more...
Consider two goods “Good 1” and “Good 2”. Assume the marginal cost of producing the goods...
Consider two goods “Good 1” and “Good 2”. Assume the marginal cost of producing the goods is zero and that each customer will purchase each good as long as the price is less than or equal to value. Customer values are: Customer A Customer B Good 1 $2,300 $2,800 Good 2 $1,700 $1,200 Suppose a monopolist only sold the goods separately. What price will the monopolist charge for good 1 to maximize revenues for good 1? What is the total...
Question 1: Louis the retired Canadian lives on a fixed budget and consumes only two goods:...
Question 1: Louis the retired Canadian lives on a fixed budget and consumes only two goods: toques (T) and maple syrup (M). Suppose Louis monthly budget is 100 and the price of the two goods are (PT,PM) (4,2). (a) Make a properly labeled diagram illustrating Louis'budget constraint with T on the hori- zontal axis and M on the vertical axis. Indicate the area corresponding to the set of bundles (M, T) that Louis can afford. (b) What is the maximum...
Suppose an individual’s utility function for two goods X and Y is givenby U(X,Y) = X^(3/4)Y^(1/4)...
Suppose an individual’s utility function for two goods X and Y is givenby U(X,Y) = X^(3/4)Y^(1/4) Denote the price of good X by Px, price of good Y by Py and the income of the consumer by I. a) (2 points) Write down the budget constraint for the individual. b) (4 points) Derive the marginal utilities of X and Y. c) (3 points) Derive the expression for the marginal rate of substitution of X for Y. Write down the tangency...
(67)Suppose that when the price of cherries is $10 per lb, the quantity supplied of cherries...
(67)Suppose that when the price of cherries is $10 per lb, the quantity supplied of cherries is 20 lbs. When price of cherries is $6 per lb, the quantity supplied of cherries is 12 lbs. The price elasticity of supply is: (a)1.7 (b)1.0 (c)2.5 (d)0.8 (68)If an excise tax is placed on the producer of a product that has a perfectly inelastic demand, given ceteris paribus then: (a)The entire tax will be paid by the producer (b)The consumer and producer...
Yvette enjoys consuming both milk and juice. Each glass of milk costs PMS1, and each glass of juice costs P$2. Suppose that Yvette buys 300 glasses of milk and 200 glasses of juice per year. The following graphs show her marginal utility curves for milk and juice. At her current consumption level, Yvette's marginal utility from consuming the last glass of milk she bought is MUM = 30 utils per glass, and her marginal utility from consuming the last glass...
2. Total and marginal utility Yakov enjoys drinking milk, since his mother tells him it will make him grow up strong. The following table contains information on Yakov's utility from milk each day. FW in the two missing cells of the table. Milk (Glasses) Total Utility (Utils) Marginal Utility (Utils per glass) 200 210 On the following graph, use the purple points (diamonds symbol) to plat Yakov's total utility (TU) curve if he consumes zero, one, two, three, four, five,...
9. The logic of price discrimination Aa Aa Consider the market for airline tickets on Trans-America Airlines from Los Angeles to Philadelphia. The following graph shows the demand curve, marginal revenue (MR) curve, and marginal cost (MC) curve for this particular flight In particular, the cost of adding another passenger to an otherwise empty seat is constant at $80. For simplicity, assume throughout this question that there are no supply constraints owing to seating capacity and assume that there are...
Is Alyssa currently maximizing her utility? 0 O No; she could buy less fruit and more cheese, not spend any more money, and be better off. 0 O Yes; the marginal utility she receives from her last pound of cheese equals that of her last pound of fruit. 0 O No; she likes fruit and cheese more than other goods, so she should buy more of both. No; she could buy more fruit and less cheese, not spend any more...
Question 1: Louis the retired Canadian lives on a fixed budget and consumes only two goods: toques (T) and maple syrup (M). Suppose Louis monthly budget is 100 and the price of the two goods are (PT,PM) (4,2). (a) Make a properly labeled diagram illustrating Louis'budget constraint with T on the hori- zontal axis and M on the vertical axis. Indicate the area corresponding to the set of bundles (M, T) that Louis can afford. (b) What is the maximum...
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