Ling likes hamburgers (H) and sliders (S). She views them as
perfect substitutes
and is always willing to trade 3 hamburger for 1 sliders.
?(?,?) = 3? + ?, ??? = 3, ??? = 1
The price of a hamburger is denoted ??, and the price of a slider
is denoted ??.
Ling’s optimal bundle will necessarily contain
(a) Only sliders if ?? / ?? < 3 and only hamburgers if ?? / ??
> 3
(b) Only hamburgers if ?? / ?? < 3 and only sliders if ?? / ??
> 3
(c) Only sliders if ?? / ?? < 1/3 and only hamburgers if ?? / ??
> 1/3
(d) Only hamburgers if ?? / ?? < 1/3 and only sliders if ?? / ??
> 1/3
(e) None of the above
Ling likes hamburgers (H) and sliders (S). She views them as perfect substitutes and is always...
3. Sara views chocolate and vanilla ice cream as perfect substitutes. She likes both and is always willing to trade one scoop of chocolate for two scoops of vanilla ice cream. a. What is Sara's MRS of chocolate to vanilla ice cream? b. If the price of a scoop of chocolate ice cream (Pc) is three times the price of vanilla (Pv), will Sara buy both types of ice cream? If not, which will she buy?
Question: If Coke and Pepsi are perfect substitutes for Lynn. She is always willing to substitute 1.1 Pepsis for 1 Coke. That is, her utility function is: U(Cokes, Pepsis)= 1.1*Cokes + Pepsis If she has an income of $100 and the price of Cokes is $1.20 and Pepsis is $1, then what is the optimal bundle that Lynn should consume?
Paul consumes only two goods, pizza (P) and hamburgers (H) and considers them to be perfect substitutes, as shown by his utility function: U = P + 4H . The price of pizza is $3 and the price of hamburgers is $6, and Paul’s monthly income is $300 (Put pizza on the horizontal axis and hamburgers on the vertical axis). c) Knowing that he likes pizza, Paul’s grandmother gives him a birthday gift certificate of $60 redeemable only at Pizza...
6. Lynn sees honey and sugar as perfect substitutes. She is always willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar. If the price of honey is three times as expensive as sugar, she will: a.) be willing to purchase either sugar or honey. b.) some honey and some sugar c.) use only honey d.) use only sugar.
Question 5: Denny views Scotch (S) and Cigars (C) as perfect complements. He always consumes them in equal proportions. One without the other gives him no utility. As such, his utility function is given by U=min[S,C]. His income is 100 and prices are pC=pS=5. (a) What is Denny’s optimal consumption bundle? How much utility does he obtain from it? (b) Would Denny prefer all prices fall to 1 or that his income be increased to 500? Explain. Suppose Denny’s income...
John considers milk (x1) and hot chocolate (x2) to be perfect substitutes at a rate of 2 : 1, that is, he always receives the same utility if he has two glasses of milk or one cup of hot chocolate to drink. He spends $12 a day on hot beverage, and milk cost $1 while hot chocolate cost $3 each. [10 Points] What is the optimal bundle of milk and hot chocolate (x1, x2) which gives him the highest utility?...
pls use microeconomic knowledge to solve
1. Paul consumes only two goods, pizza P and hamburgers H and considers them to be perfect substitutes, as shown by his utility function U(P, H) = P+4H. The price of pizza is pp = 3 and the price of hamburgers is pu = 6, and Paul's monthly income is M = 300. (a) How many pizzas and hamburgers does he consume when he maxi- mizes utility? Is the tangency condition satisfied? (b) Knowing...
Exercise 3 For Sandra, coffee and sugar are perfect complements: she wants to consume exactly 2 g of sugar for each cup of coffee. She has S6 to spend on sugar and coffee. One gram of sugar costs 5 cents and one cup of coffee costs 20 cents. Draw a diagram, with sugar on the horizontal axis and cup of coffee on the vertical axis, to answer the following questions. 1. Which bundle will Sandra consume (represented by point A)?...
Exercise 3 For Sandra, coffee and sugar are perfect complements: she wants to consume exactly 2 g of sugar for each cup of coffee. She has S6 to spend on sugar and coffee. One gram of sugar costs 5 cents and one cup of coffee costs 20 cents. Draw a diagram, with sugar on the horizontal axis and cup of coffee on the vertical axis, to answer the following questions. 1. Which bundle will Sandra consume (represented by point A)?...
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...