3. Martha has preferences represented by the utility function U(a,b) = ab/100, where "a" is the number of ounces of animal crackers that she consumes and “b” is the number of ounces of beans that she consumes. Bertha has preferences represented by the utility function V(a,b) = 1000a²b², where "a" and "b" represent animal crackers and beans. A) Calculate the locus of points (four sets of coördinates) that Martha finds indifferent to having 8 ounces of animal crackers and 2 ounces of beans. (Hint: You must calculate utility first.) Also calculate the locus of points that she finds indifferent to having 6 ounces of animal crackers and 4 ounces of beans. Repeat the analysis for Bertha. Fill the values in the Table below. Utility at a=8, b=2 Locus of points for Utility at a=8, b=2 (list 4 coördinates) Person Martha Bertha B) Are Martha's preferences convex? Explain. C) How are Martha and Bertha's preferences related? Utility at a=6, b=4 Locus of points for Utility at a=6, b=4 (list 4 coördinates)

3. Martha has preferences represented by the utility function U(a,b) = ab/100, where "a" is the number of ounces of animal crackers that she consumes and “b” is the number of ounces of beans that she consumes. Bertha has preferences represented by the utility function V(a,b) = 1000a²b², where "a" and "b" represent animal crackers and beans. A) Calculate the locus of points (four sets of coördinates) that Martha finds indifferent to having 8 ounces of animal crackers and 2 ounces of beans. (Hint: You must calculate utility first.) Also calculate the locus of points that she finds indifferent to having 6 ounces of animal crackers and 4 ounces of beans. Repeat the analysis for Bertha. Fill the values in the Table below. Utility at a=8, b=2 Locus of points for Utility at a=8, b=2 (list 4 coördinates) Person Martha Bertha B) Are Martha's preferences convex? Explain. C) How are Martha and Bertha's preferences related? Utility at a=6, b=4 Locus of points for Utility at a=6, b=4 (list 4 coördinates)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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