In 2005, suppose a typical U.S. owner of a home theater (a television and a DVD player) bought 8 music CDs (q₁) per year and 24 top-20 movie DVDs (92) per year. The average price of a CD was about p₁ = $15, the average price of a DVD was roughly p₂ = $20, and the typical consumer spent $600 on these entertainment goods. We'll call this typical consumer Barbara. We estimate her Cobb-Douglas utility function as 0.2 0.8 U(91, 92)=91₁ 9₂ Use the 3-point curved line drawing tool to draw Barbara's annual demand curve for CDs, using prices of $15, $30, and $60 as your control points. Carefully follow the instructions above, and only draw the required object. Explain the shape of the price-consumption curve for changes in the price of good q₁- The equation for Barbara's price-consumption curve for changes in the price of good q₁ is 92 (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a subscript can be created with the character.)

In 2005, suppose a typical U.S. owner of a home theater (a television and a DVD player) bought 8 music CDs (q₁) per year and 24 top-20 movie DVDs (92) per year. The average price of a CD was about p₁ = $15, the average price of a DVD was roughly p₂ = $20, and the typical consumer spent $600 on these entertainment goods. We'll call this typical consumer Barbara. We estimate her Cobb-Douglas utility function as 0.2 0.8 U(91, 92)=91₁ 9₂ Use the 3-point curved line drawing tool to draw Barbara's annual demand curve for CDs, using prices of $15, $30, and $60 as your control points. Carefully follow the instructions above, and only draw the required object. Explain the shape of the price-consumption curve for changes in the price of good q₁- The equation for Barbara's price-consumption curve for changes in the price of good q₁ is 92 (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a subscript can be created with the character.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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