1) The price of soda increases to $3 each. How would Joe's budget line change?
2) Price of soda increases to $3 each. What is the effect of this price change on Joes Utility function?
3) Suppose the price of soda increases $3 each. Would Joe be better off or worse? why?
Homework Answers
1) The initial budget line of Joe --> 18L + 2S = 72
The budget line after soda price increase --> 18L + 3S = 72
2) Price of a good does not affect the utility function. The utility function of Joe remains the same even after change in price of Soda
3) Both soda and Lobster was contributing positively towards the utility of Joe. Since utility function was a product function, initial consumption of both items would have been more than zero. An increase in any price will mean that Joe can consume only lesser of an item or both the items. Therefore, Joe will be worse off with the increase in price.
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1) The price of soda increases to $3 each. How would Joe's
budget line change?
2)...
2. (7 points) Suppose Joe's utility for lobster (L) and soda (S) can be represented as...
2. (7 points) Suppose Joe's utility for lobster (L) and soda (S) can be represented as U Lo5 s 6.5 Joe walks into a restaurant with $72. Lobsters cost $18 each and sodas cost $2 each. (1) What is the equation for Joe's budget line? (2) What is Joe's marginal utility of L? (3) What's Joe's marginal rate of substitution? MRS- (4) How would Joe's budget line change if he receives a $20 cash gift? Answer
Suppose Joe's utility for lobster (L) and soda (S) can be represented as u=L^.4 S^.6 Joe...
Suppose Joe's utility for lobster (L) and soda (S) can be represented as u=L^.4 S^.6 Joe walks into a restaurant with $90. Lobsters cost $18 each and sodas cost $2 each. How much lobster and soda will Joe consume if he intends to spend all his money? (There are no tax and no tips.)
At a price of $3 each, Dave (a typical New Yorker) drinks 200 44-ounce sodas each...
At a price of $3 each, Dave (a typical New Yorker) drinks 200 44-ounce sodas each year. Concerned about burgeoning obesity, the Mayor of New York proposes a $0.50 tax on such drinks. He then proposes compensating consumers for the price increase by mailing each consumer a $100 check each year. (a) What will happen to Dave’s consumption of soda? Show using an indifference curve diagram with soda on the horizontal axis and a composite good (price = $1)...
please answer both（b）and（d） thank you 3. Nick enjoys having soda (a) with his cheese pizza (c):...
please answer both（b）and（d）
thank you
3. Nick enjoys having soda (a) with his cheese pizza (c): his preferences are represented by the utility function u(a,c) = min(a, 2e) (a) Suppose Nick has 10 slices of cheese pizza (e), how many sodas must he consume in order to have a utility of 40? (2 points) U=40. (=10. - 4020 & 40=22 (b) Setup Nick's utility maximization problem. Solve for his optimal levels of pizza and soda as functions of prices a"...
3. Originally, the price of X is $150 and the price of Y is S50. If the price of X increases by $20 and the price o...
3. Originally, the price of X is $150 and the price of Y is S50. If the price of X increases by $20 and the price of Y increases by S10, the new budget line will a. move outward and be parallel to the old budget line b. move outward and become steeper c. move inward and become steeper d. move outward and become flatter e. move inward and become flatter x"2 + 1n0) 4. An individual's preferences are represented...
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1. The price of elasticity of demand for a commodity is -2. What would be the change in quantity demanded, if price increases by 30 %? 2. A decrease in cost of producing X per unit reduces the price of X per unit. As a result, the demand for good Y increases. Are good X and Y complements, substitutes, both, or neither? 3. Suppose a recent research finds that an increase in consumption of a good reduces the risk of...
1. Suppose that when the price of a good is s15, the quantity demanded is 4o...
1. Suppose that when the price of a good is s15, the quantity demanded is 4o units, and when the price falls to s6, the quantity increases to 6o units. The price elasticity of demand near a price of s6 and a quantity of 60 can be calculated as: A) -5/6 C)-2/9 B)-2 D) -9/2 2. Which of the following statements is true? A) The price elasticity of demand is positive when there is an inverse relationship betweern price and...
S + tax on seller Price (dollars per unit) 0 1 2 3 4 5 Quantity (thousands of units) 7) In the above figure, the amount...
S + tax on seller Price (dollars per unit) 0 1 2 3 4 5 Quantity (thousands of units) 7) In the above figure, the amount of the tax per unit imposed on the sellers is A) $0.50. B) $1.00. C) $1.50. D) $2.00. 8) In the above figure, the deadweight loss due to the tax is A) $1,000. B) $2,000. C) $4,000. D) $8,000. 9) Suppose Jill's consumption bundle is made up of 2 goods, apples and bottles of...
S + tax on seller Price (dollars per unit) 0 1 2 3 4 5 6 Quantity (thousands of units) 7) In the above figure, the amou...
S + tax on seller Price (dollars per unit) 0 1 2 3 4 5 6 Quantity (thousands of units) 7) In the above figure, the amount of the tax per unit imposed on the sellers is A) $0.50. B) $1.00 C) $1.50 D) $2.00. 8) In the above figure, the deadweight loss due to the tax is A) $1,000 B) $2,000. C) $4,000. D) $8,000. 9) Suppose Jill's consumption bundle is made up of 2 goods, apples and bottles...
1. Which of the following claims is true at each point along a price-consumption curve? A)...
1. Which of the following claims is true at each point along a price-consumption curve? A) Utility is maximized but income is not all spent. B) All income is spent, but utility is not maximized. C) Utility is maximized, and all income is spent. D) The level of utility is constant. 2. Consider a graph on which one good Y is on the vertical axis and the only other good X is on the horizontal axis. On this graph the income-consumption curve...
2. (7 points) Suppose Joe's utility for lobster (L) and soda (S) can be represented as U Lo5 s 6.5 Joe walks into a restaurant with $72. Lobsters cost $18 each and sodas cost $2 each. (1) What is the equation for Joe's budget line? (2) What is Joe's marginal utility of L? (3) What's Joe's marginal rate of substitution? MRS- (4) How would Joe's budget line change if he receives a $20 cash gift? Answer
please answer both（b）and（d）
thank you
3. Nick enjoys having soda (a) with his cheese pizza (c): his preferences are represented by the utility function u(a,c) = min(a, 2e) (a) Suppose Nick has 10 slices of cheese pizza (e), how many sodas must he consume in order to have a utility of 40? (2 points) U=40. (=10. - 4020 & 40=22 (b) Setup Nick's utility maximization problem. Solve for his optimal levels of pizza and soda as functions of prices a"...
3. Originally, the price of X is $150 and the price of Y is S50. If the price of X increases by $20 and the price of Y increases by S10, the new budget line will a. move outward and be parallel to the old budget line b. move outward and become steeper c. move inward and become steeper d. move outward and become flatter e. move inward and become flatter x"2 + 1n0) 4. An individual's preferences are represented...
1. Suppose that when the price of a good is s15, the quantity demanded is 4o units, and when the price falls to s6, the quantity increases to 6o units. The price elasticity of demand near a price of s6 and a quantity of 60 can be calculated as: A) -5/6 C)-2/9 B)-2 D) -9/2 2. Which of the following statements is true? A) The price elasticity of demand is positive when there is an inverse relationship betweern price and...
S + tax on seller Price (dollars per unit) 0 1 2 3 4 5 Quantity (thousands of units) 7) In the above figure, the amount of the tax per unit imposed on the sellers is A) $0.50. B) $1.00. C) $1.50. D) $2.00. 8) In the above figure, the deadweight loss due to the tax is A) $1,000. B) $2,000. C) $4,000. D) $8,000. 9) Suppose Jill's consumption bundle is made up of 2 goods, apples and bottles of...
S + tax on seller Price (dollars per unit) 0 1 2 3 4 5 6 Quantity (thousands of units) 7) In the above figure, the amount of the tax per unit imposed on the sellers is A) $0.50. B) $1.00 C) $1.50 D) $2.00. 8) In the above figure, the deadweight loss due to the tax is A) $1,000 B) $2,000. C) $4,000. D) $8,000. 9) Suppose Jill's consumption bundle is made up of 2 goods, apples and bottles...
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