2nd attempt In a two-good market, a consumer starts with an initial endowment of (x1, x2) = (2.00, 3.00), while the market prices for these goods are given by (P1, P2) = (1.00, 8.00). The consumer has the following utility function: 0.54 0.46 U = Given this information, what will this consumer's final choice of quantity for each good be? X1 = x2 =

2nd attempt In a two-good market, a consumer starts with an initial endowment of (x1, x2) = (2.00, 3.00), while the market prices for these goods are given by (P1, P2) = (1.00, 8.00). The consumer has the following utility function: 0.54 0.46 U = Given this information, what will this consumer's final choice of quantity for each good be? X1 = x2 =

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter10: Consumer Choice Theory

Section: Chapter Questions

Problem 6P

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11) Stanley consumes only white and red wines and his utility function can be describedby U(R,W) = R0.40∙W0.60, where R is the number of bottles of red wine and W is the4number of bottles of white wine that he consumes per month. Suppose that his income is$500 and the price of a bottle of red wine $20 and the price of a bottle of white wine is$15. In this case, Stanley will purchase _____ bottles of red wine and _____ bottles ofwhite wine per month. Next, suppose that the price of red wine goes up to $35 per bottle.In this case, Stanley would consume ______ quantity of bottles of white wine comparedto the original situation.A) 10; 20; smallerB) 20; 10; smallerC) 10; 20; the sameD) 20; 10; the sameE) None of the above.
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.
Sam's extended family spends $3,200 per month on wine and beer. Their utility function is given by U = 200WB, where W represents the number of bottles of wine that they buy, and B represents the number of cases of beer that they buy. Wine costs $25 per bottle and beer costs $32 per case. Sam's family wants to maximize their utility. Calculate how many bottles of wine and how many cases of beer they should buy. Show your calculation(s).
2 3) For each utility function, determine the marginal utility with respect to x, marginal utility with respect to y, and the MRS. (3pts each) a) U(x, y)-3x+2y b) U(x, y) 10x¹/5 y c) U(x, y)=x+ y²
Suppose Jimi has reference dependent preferences over guitars and money as in Tversky and Kahneman (1991). His utility functions are given below. Gains Gains 400 -2 -2 2 Guitars 2$ Losses Losses i-600 -2 What is the least amount of money Jimi is willing to accept to sell one of his guitars? (just enter a dollar amount, i.e., "10o0", not "$1000"
Jane spends $210 per month on wine and beer. Her utility function is given by TU = 100WB, where W represents the number of bottles of wine that she buys and B represents the number of cases of beer that she buys. If wine costs $10 per bottle and beer costs $15 per case, she will maximize utility by buying: 10 bottles of wine and 13.33 cases of beer. equal amounts of wine and beer. none of the above. 10.5 bottles of wine and 7 cases of beer. 2 bottles of wine and 3 cases of beer.
ayesha derives utility from travelling and outdoor dinning o weekends as given utility function U(t,d)=TD.the price of a day spent travelling is $160{Pt=160} and price of dining outdoor $200{Pd=200}.ayesha annual budget for this is $8000. find ayesha's utility maximizing choice of days travelling and dining outside. and alsoo find uutility level from consuming that bundles .show findings graphically
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.
12) A consumer's preferences are given by U(X,Y)= Xo6y04. The price of X is 4, and the price of Y is 6. The consumer has an income of $2200. a) What is the utility maximizing choice of X and Y? b) How would the utility maximizing choice change if price of X rose to 8? c) Given the answers to the previous parts plot a linear demand function for X.
Rafe is optimally choosing to consume 6 apples and 3 bananas. The prices of apples and bananas are p. = 7 and pb - 7. Which of the following utility functions over quantities of apples (a) and bananas (b) could represent Rafe's preferences? = u(a, b)-a4/5 61/5 Ou(a, b) = a¹/5 64/5 Ou(a, b)-a2/3 b1/3 Ou(a, b)-a¹/3 2/3
Given the utility function U (x1, x2) = x³x2.7 select all that are true. a) 30% of the budget is spent on good 1. ○b) V (p, I) = 30.370.7 I 10 P1P2 c) If P2 = 2 and I = 60, then $18 is spent on good 21. d) If P1 = 9, P2 = 2, and I = 60 then the consumer enjoys 1.81 utils of utility. e) Half the budget is spent on good 1 and the other half is spent on 2.
2- Suppose a consumer who consumes two goods, good 1 and good 2. We denote his consumption of good 1 by q1, and his consumption of good 2 by q2. Its preferences for good 1 and good 2 can be represented by the following utility function: U (Q1/ Q2) = 3 (Q1) 1/3 (Q2) 2/3 The marginal utility of good 1 is um1 = (Q2/Q1) 2/3 and the marginal utility of good 2 is um2 =2 (Q1/Q2) 1/3 Determine the quantity of good 2 q2 "in the shopping basket (q1 '; q2) = (32; q2 ) so as to find on the same indifference curve as the consumption basket (q1; q2) = (8; 64).