Microeconomics
2nd Edition
ISBN: 9780073375854
Author: B. Douglas Bernheim, Michael Whinston
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 5, Problem 3CP
To determine
Identify the price of concert ticket.
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Suppose a consumer had a utility function given by: U=X + 4Y. If the
price of Good X (Px) is $1 and the price of Good Y is $8 then what is
the utility maximizing quantity of Good X the consumer will purchase
with a budget of $4?
(Round to the nearest two decimal places if necessary.)
a)Assume that the typical consumer always spends a small share of her overall budget on Vietnamese meals and use the utility maximization conditions to find the demand for Vietnamese food of the typical consumer (keep in mind that since utility is quasi-linear, you can find demand without information about the consumer’s weekly budget).
b) Sum across consumers to find the weekly market demand for Vietnamese meals in NYC.
Pele enjoys coffee (C) and tea (T) according to the function
U(C, T) = 6C + 8T
(a) What does her utility function say about her MRS of coffee and tea?
(b) Suppose the price of coffee (PC) and the price of tea (PT) are both $3. If Alana has $12 to spend
on these products,
i. How much coffee and tea should she buy to maximize her utility?
ii. Draw a carefully labeled graph of her indifference curve map and her budget constraint. Put the
quantities of coffee on the horizontal axis. Be sure to identify the utility maximizing point.
(c) Would Alana buy more coffee if she had more income? Explain.
(d) Suppose the price of coffee fell to $2. How would her consumption change?
Chapter 5 Solutions
Microeconomics
Ch. 5 - Prob. 1DQCh. 5 - Prob. 2DQCh. 5 - Prob. 3DQCh. 5 - Prob. 4DQCh. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - Prob. 6P
Ch. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - Prob. 10PCh. 5 - Prob. 11PCh. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 1CPCh. 5 - Prob. 2CPCh. 5 - Prob. 3CPCh. 5 - Prob. 4CPCh. 5 - Prob. 5CPCh. 5 - Prob. 6CPCh. 5 - Prob. 7CPCh. 5 - Prob. 8CP
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