mar 75 I1 2 0, 12 2 0 s.t. 8* +4* r, <1600 • The marginal utility of good 1: MU, = .25 • The marginal utility of good 2: MU2 = 75 × Equation Description: A consumer is attempting to maximize utility subject to a budget constraint.Utility equals the product of two terms: the first term is units of good 1 raised to the .25 power; and, the second term is units of good 2 raised to the .75 power. The price per unit of good 1 is $8; the price per unit of good 2 is $4; and, consumer income is $1600. Marginal utility of good 1. equals the product of three terms: the first term is .25; the second term is units of good 2 raised to the 75 power; the third term is units of good 1 raised to the -75 power. Marginal utility of good 2 equals the product of three terms: the first term is.75: the second term is units of good 1 raised to the .25 power; the third term is units of good 2 raised to the -.25 power. Question: What is the highest level of utility the consumer can achieve? O 150 utils O 79.2 utils O None of the above O 19.9 utils 6.8 utils O 191.7 utils O 333.3 utils

mar 75 I1 2 0, 12 2 0 s.t. 8* +4* r, <1600 • The marginal utility of good 1: MU, = .25 • The marginal utility of good 2: MU2 = 75 × Equation Description: A consumer is attempting to maximize utility subject to a budget constraint.Utility equals the product of two terms: the first term is units of good 1 raised to the .25 power; and, the second term is units of good 2 raised to the .75 power. The price per unit of good 1 is $8; the price per unit of good 2 is $4; and, consumer income is $1600. Marginal utility of good 1. equals the product of three terms: the first term is .25; the second term is units of good 2 raised to the 75 power; the third term is units of good 1 raised to the -75 power. Marginal utility of good 2 equals the product of three terms: the first term is.75: the second term is units of good 1 raised to the .25 power; the third term is units of good 2 raised to the -.25 power. Question: What is the highest level of utility the consumer can achieve? O 150 utils O 79.2 utils O None of the above O 19.9 utils 6.8 utils O 191.7 utils O 333.3 utils

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. [In class, we noted that the consumer will spend all their money if they have in- creasing preferences. Here, we give a calculus-based condition for the consumer to spend all their money, that doesn't assume more is always better. The con- dition is a stronger version of what is sometimes called "local non-satiation".] Let E X, and let MU, denote the marginal utility for good i € {1,2} at r. (a) Suppose some good i has MU, #0 (it could be positive or negative), and suppose the consumer is not spending all her money at bundle x (that is pr 0 if MU; <0. Argue that the consumer would not optimally choose r. x (b) Suppose MU₁(x) = MU₂(x) = 0, the good is affordable (p ≤ m), and u is concave. Explain why r is optimal.
Given the following data, please determine how much of good A and good B should the consumer prefer to maximize utility that is within his/her budget. Money Income - PhP 120 Price of Good B - PhP 8 Unit of Product 1st 2nd 3rd 4th 5th 6th 7th 8th Determine: Good A MUa(utils) | MUa/PhP 14 10 8 7 5 4.5 2 0 Price of Good A- PhP 7 1. Amount of Good A to purchase 2. Amount of Good B to purchase Jua Good B MUa (utils) | MUb/PhP 28 24 19 13 12 6 3 1 TUR 3. Total amount purchased 4. Total maximum possible utility derived from the amount of Good A and B purchased and consumed which are within the budget constraint. 5. Show other combination/s of Good A and B that are either not within the budget constraint or does not maximize total utility. 6. Conclusion.
ADVANCED ANALYSIS Let: MUA/PA=ZA = 10 - 1 Instructions: Enter your answers as a whole number. How is the $10 best allocated between A and B? MUB/PB=ZB=21-2y, where z is marginal utility per dollar measured in utils, x is the amount spent on product A, and y is the amount spent on product B. Assume that the consumer has $10 to spend on A and B-that is, x+y=10. Note: Px = $1 and Py = $1. LA on A and $ on B How much utility will the marginal dollar yield? utils Prev 1 of 7 Exit Submit Next > Check my work
1. This question will let you examine/explore a more interesting utility func- tion than the simple example discussed in class as there will be both cross-price elas- ticity and an inferior good. Suppose you are told a consumer has the following utility function: U (9219₂) = 9z+√9z+ 9₂ You should assume income is Y, the price of good r is P2, and the price of good z is P₂. This question will ask about several concepts discussed in lecture. (a) What is the Marshallian demand for goods x and z? I.e. find (qq) for both interior solutions and corner solutions. Note: the outcome is "ugly" for the interior section and both corner should include constraints, i.e. limits using Y relative to f(P, P₂). Hint: if solving using MRS = MRT, can use this information again in part (d). (b) Suppose you are told P₂ = $8 and P₂ = $1. Create a graph showing the Income Consumption Curve (ICC) for Y = {$12.25, $35, $49, $70, $98). Be sure to clearly label the graph. Based on the ICC, which of the goods is…
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Find marginal utility for each consumption level for both products and please show your work in Table.
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Econ 3
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