brownie has $100 that he can spend on milk and gas. A gallon of milk costs $5. However, government gives its citizens a coupon that entitles people to 20% discount on their first 10 gallon milk purchases. Gas costs $4 per gallon and government charges $1 for each gallon of purchased gas. John’s utility function is U (x, y) = 9x+10y, where x and y represent gallons of milk and gas consumed, respectively. What is John’s optimal consumption of milk and gas? Question 3 Part b If government removes the quantity restriction to which the coupon applies (i.e. 20% discount is applied to any quantity

brownie has $100 that he can spend on milk and gas. A gallon of milk costs $5. However, government gives its citizens a coupon that entitles people to 20% discount on their first 10 gallon milk purchases. Gas costs $4 per gallon and government charges $1 for each gallon of purchased gas. John’s utility function is U (x, y) = 9x+10y, where x and y represent gallons of milk and gas consumed, respectively. What is John’s optimal consumption of milk and gas? Question 3 Part b If government removes the quantity restriction to which the coupon applies (i.e. 20% discount is applied to any quantity

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter21: Demand: Consumer Choic

Section: Chapter Questions

Problem 16E

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jamie has $100 that he can spend on milk and gas. A gallon of milk costs $5.However, government gives its citizens a coupon that entitles people to 20%discount on their first 10 gallon milk purchases. Gas costs $4 per gallon andgovernment charges $1 for each gallon of purchased gas. Jamies utility functionis U (x, y) = 9x+10y, where x and y represent gallons of milk and gas consumed,respectively. What is Jamies optimal consumption of milk and gas?Part bIf government removes the quantity restriction to which the coupon applies (i.e.20% discount is applied to any quantity of milk purchased), what will be jamieoptimal consumption?
2) Suppose Kelvin receives RM400 allowance a month and he only spends on other goods and food. In the first year, the price of food is RM4 per kg and the price of other goods is RM1 per unit. His utility function is U-20√GF, where G represents other goods and F represents food. In the second year, prices of both commodities increased by RM1 each due to tax. a) Assuming Kelvin maximizes his utility subject to his allowance, how much food and other goods were consumed in the first year? b) In the second year, if his allowance did not increase, how will this affect his food, other goods consumption, and his utility? c) Suppose he received rebates that reflect the true cost of living (an inflation index that holds utility constant over time: ideal cost of living), what is his level of food and other goods consumption under this circumstance? How much compensation did he receive? d) If Kelvin was given a rebate such that he could still enjoy his bundle of goods in the first year, how much…
A consumer can consume two goods, A and B, and has the utility function U-15A1/281/2, The consumer's budget is $900, the price of good A is $15 per unit and the price of good B is $45 per unit. (Assume A is the horizontal axis good and B is the vertical axis good. Both goods are infinitely divisible, but round numerical answers to 2 decimal places as necessary) What is the consumer's marginal rate of substitution? What is the consumer's marginal rate of transformation? What is the formula for the consumer's budget constraint? What is the consumer's utility-maximizing bundle given the utility function and budget constraint? A B H
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.
2) A consumer of two goods, either 1 or 2, has a utility function U (X1, X2) = x1 0,6.x2 0.4, where x denotes units of good 1 and x2 units of good 2. The price of good 1 is 5 euros per unit, the price of good 2 is 3 euros per unit and the consumer's income is 150 euros. Suppose only the price of good 1 changes and so does the new one price is p1‘ = 2. Then the Slutsky substitution effect with respect to good 1 is Choose one: A) Not defined B) 10.8 C) 8.8 D) 7.8 E) 9.8
Suppose that Omar's marginal utility for cups of coffee is constant at 5.5 utils per cup no matter how many cups he drinks. In contrast, his marginal utility per doughnut is 10 for the first doughnut he eats, 9 for the second, 8 for the third, and so on (that is, declining by 1 util per additional doughnut) In addition, suppose that coffee costs $1 per cup, doughnuts cost $1 each, and Omar has a budget that he can spend only on doughnuts, coffee, or both. How big would that budget have to be before he will spend a dollar buying a first cup of coffee? Instructions: Enter your answer as a whole number
1) a consumer of two goods, either 1 or 2, has a utility function u (X1, X2) = X1 0.6. X2 0.4, where X1 denotes units of good 1 and X2 units of good 2. The price of good 1 is 5 euros per unit, the price of good 2 is 3 euros per unit and the consumer's income is 150 euros . Assume that only the price of good 1 changes and that the new price is P1 '= 2. Then the income that allows the consumer to consume exactly the initial basket after the decrease in the price of good 1 is Choose one: A) 86 B) 66 C) 76 D) 96 E) Not defined
Suppose that Omar’s marginal utility for cups of coffee is constant at 1.5 utils per cup no matter how many cups he drinks. On the other hand, his marginal utility per doughnut is 10 for the first doughnut he eats, 9 for the second he eats, 8 for the third he eats, and so on (that is, declining by 1 util per additional doughnut). In addition, suppose that coffee costs $1 per cup, doughnuts cost $1 each, and Omar has a budget that he can spend only on doughnuts, coffee, or both. How big would that budget have to be before he would spend a dollar buying a first cup of coffee?
5) A consumer of two goods, good 1 and good 2, has a utility function u (X1, X2) = x1 0,6. X2 0,4, where x denotes units of good 1 and X2 units of good 2. The price of good 1 is 5 euros And the price of good 2 is 3 euros per unit and the consumer’s income is 150 euros. Suppose that only the price of good 1 changes and that the new price is p, ‘ = 2. Then the demand function of good 1 that is derived from the utility function is Choose one: A) X1= 0.6m/p1 B) X1= 6m/p1 C) X1= 4m/p1 D) X1= 0.4m/p1 E) Not defined
Suppose that Omar's marginal utility for each additional cup of coffee is 1.5 utils per cup no matter how many cups he drinks. On the other hand, his marginal utility per doughnut is 11 for the first doughnut he eats, 10 for the second he eats, 9 for the third he eats, and so on (that is, declining by 1 util per additional doughnut). In addition, suppose that coffee costs $1 per cup, doughnuts cost $1 each, and Omar has a budget that he can spend only on doughnuts, coffee, or both. What is the minimum value of Omar's budget if he purchases one cup of coffee? Instructions: Enter your answer as a whole number.
A consumer has a budget of $3000 in a given period, and wishes to buy two goods, X and Y, so as to maximise his utility. The price of good X is $5 and the price of good Y is $2, and his MRS is given by the formula 2Y/X. How many units of good X will he buy in that period?
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.