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- Livi consumes both sushi (s) and green tea (t). The following table shows her marginal utility schedule for these two goods (note, MUs = 14 when the quantity increases from 0 to 1, and correspondingly for the other values). The price of sushi is $2 a piece and the price of green tea is $1 a cup. Q MUs MUt MUs/Ps MUt/Pt 1 14 13 ___ ___ 2 12 11 ___ ___ 3 11 10 ___ ___ 4 10 8 ___ ___ 5 9 7 ___ ___ 6 8 6 ___ ___ 7 6 3 ___ ___ 8 4 2 ___ ___ Calculate the MU/P for each good, and fill in the blanks in the table.…John likes Coca-Cola. After consuming one Coke, John has a total utility of 10 utils. After two Cokes, he has a total utility of 25 utils. After three Cokes, he has a total utility of 50 utils. Does John show diminishing marginal utility for Coke, or does he show increasing marginal utility for Coke? Supposethat John has $3 in his pocket. If Cokes cost $1 each and John is willing to spend one of his dollars on purchasing a first can of Coke, would he spend his second dollar on a Coke, too? What about the third dollar? If John’s marginal utility for Coke keeps on increasing no matter how many Cokes he drinks, would it be fair to say that he is addicted to Coke?John likes Coca-Cola. After consuming one Coke, John has a total utility of 10 utils. After two Cokes, he has a total utility of 25 utils. After three Cokes, he has a total utility of 50 utils. Does John show diminishing marginal utility for Coke or does he show increasing marginal utility for Coke? Suppose that John has $3 in his pocket. If Cokes cost $1 each and John is willing to spend one of his dollars on purchasing a first can of Coke, would he spend his second dollar on a Coke, too? What about the third dollar? If John’s marginal utility for Coke keeps on increasing no matter how many Cokes he drinks, would it be fair to say that he is addicted to Coke? *use tables and/or graphs if possible, please original work
- 1 Alice has a monthly lunch budget of 360 dollars which she spends on either burgers (B) or pizza (Z). The price of each pizza is 16. dollars and the price of each burger is 8 dollars. Alice's utility is given by: u(B, Z) = B'/2 +4Z!/2 + 47!/2 a) Find Alice's budget constraint. Set up the Lagrangian and find her optimal consumption. What is her new consumption if the price of burgers becomes 16 dollars?A consumer is making purchases of products Alpha and Beta such that the marginal utility of product Alpha is 63 and the marginal utility of product Beta is 40. The price of product Alpha is $9, and the price of product Beta is $5. The utility-maximizing rule suggests that, to stay within a given budget constraint, this consumer should Multiple Choice O O O increase consumption of product Beta and increase consumption of product Alpha. make no change in the consumption of Alpha or Beta. increase consumption of product Beta and decrease consumption of product Alpha. increase consumption of product Alpha and decrease consumption of product Beta.3. Finding the optimal combination of two goods - $2. Suppose that Larry buys Larry enjoys consuming both cheese and fruit. Each pound of cheese costs Pc = $1, and each pound of fruit costs PF 300 pounds of cheese and 200 pounds of fruit per year. The following graphs show his marginal utility curves for cheese and fruit. At his current consumption level, Larry's marginal utility from consuming the last pound of cheese he bought is MUC S 30 utils per pound, and his marginal utility from consuming the last pound of fruit he bought is MUF = 30 utils per pound. 60 40 30 IL 20 10 400 500 600 50 40 A 30 B C D 20 10 0 0 100 Is Larry currently maximizing his utility? Combination 200 300 CHEESE (Pounds per year) 300, 30 (Pounds per Year) 200 400 300 No; he could buy less cheese and more fruit, not spend any more money, and be better off. O No; he likes fruit and cheese more than other goods, so he should buy more of both. O No; he could buy more cheese and less fruit, not spend any more money,…
- 1 Consider a consumer who consumes only two goods, 21 and z2. His utility function is u (21, 22) = In z1 + 2. where In represents the natural logarithm. 1.a Derive the consumer's MRS of good 1 for good 2 using calculus to calculate his marginal utility from z and his marginal utility from z2. 1.b If the price of z1 is $2 per unit and the price of z2 is $4 per unit, and the consumer's income is $100, What is the equation of this consumer's budget line? 1.c What are the optimal consumption choices, z and z5, for this consumer? Show your work.Tracy consumes dress shoes (D) and casual Crocs (C). Her marginal utility from consuming casual Crocs is MU 20DC and her marginal utility from consuming dress shoes is MU = 10C2. Her annual shoe allowance is $360, which she spends 8- on only dress shoes and Crocs 7- U2 If she pays $40 for a pair of dress shoes and $40 for a pair of Crocs, what is her optimal consumption bundle? в- pairs of Crocs andpairs of Tracy's satisfaction-maximizing bundle contains dress shoes. (Enter your responses using integers.) 3- 2- 1- 0- 0 2 4 6 10 12 14 16 18 Crоcs Dress shoes 99Nadia likes spare ribs, R, and fried chicken, C. Her utility function is U = 10R°C. Her weekly income is Y = $180, which she spends on only ribs and chicken. 8- If she pays $20.00 for a slab of ribs and $10.00 for a chicken, what is her optimal consumption bundle? 7- Nadia's optimal consumption bundle contains slabs of ribs and fried 6- chickens. (Enter numeric responses using integers.) 3- 2- 1 89 10 11 12 13 14 15 16 17 18 Chicken tv 21 DII DD 80 F7 F8 F9 F10 F2 F3 F4 F5 F1 @ #3 $ % & 1 2 3 5 7 8. 9. Q W E R T Y A F G H. K C V M option command command of .. .- V - B N
- Enrique is a movie buff. He likes to watch on demand movies from his cable company, which cost $5 each, and so likes to go to the local movie house, which charges $15 a ticket. Suppose that given his budget and his tentative spending plans, the marginal utility from a cable movie is 15 utils and the marginal utility of a movie at the local cinema is 45 utils. Assuming he is spending his entire budget, Enrique is currently maximizing his utility Enrique can increase his utility by buying more cable movies and watching fewer cinema movies Enrique can increase his utility by buying more cinema movies and fewer cable moviesDevon's utility function can be written as ?1^0.50?2^0.50, where ?1 is the quantity of hamburgers consumed and x2 is the quantity of milk shakes. His income is $2,400.00. 1) Hamburgers cost $8.00 each and the price of one milk shake is $4.00. If he is maximizing his utility, how much will Devon spend on hamburgers? $ 2)The price of hamburgers decreases to $7.37 each. Now, how much will Devon spend on hamburgers if he is maximizing his utility? $3) Suppose Joe's utility for lobster (L) and soda (S) can be represented as U =10.5 50.5 MUL=0.5 L -0.5 s0.5, MUs=0,5 L0.5 s-0.S. Joe walks into a restaurant with $72. Lobsters cost $18 each and sodas cost $2 each. How much lobster and soda will Joe consume if he intends to spend all his money? (There are no tax and no tips.)
