7 (a) Assume P₁ = 1, P₂ = 2, Y (income) = 100. Point rationing is in force. Government specifies that when the consumer buys one unit of each good, she must hand over a specified number of ration coupons as well as the money price and she is given an initial endowment of ration coupons. One unit of X₁ requires two coupons and a unit of X₂ requires one coupon, total 100 coupons. Maximize the consumer's utility given that: L B U=X₁ X₂ Show your result in a graph.

7 (a) Assume P₁ = 1, P₂ = 2, Y (income) = 100. Point rationing is in force. Government specifies that when the consumer buys one unit of each good, she must hand over a specified number of ration coupons as well as the money price and she is given an initial endowment of ration coupons. One unit of X₁ requires two coupons and a unit of X₂ requires one coupon, total 100 coupons. Maximize the consumer's utility given that: L B U=X₁ X₂ Show your result in a graph.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter2: The One Lesson Of Business

Section: Chapter Questions

Problem 9MC

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The minimum acceptable price for a product that producer Sam is willing to receive is 100. The price he could get for the product in the market is 120. How much is Sam's producer surplus? Multiple Choice 220 more than $100 20 1,200 120 Mc Graw Hill 76F Sunny O Type here to search
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