ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
Bartleby Related Questions Icon

Related questions

bartleby

Concept explainers

Question

Pls help with thsi question I am stuck

 

Given the image attatched:

1.Given the above Marginal Utilities and prices to form the optimality condition for utility
maximization. According to this optimality condition, what must be the ratio of Films to
Books in an optimal consumption bundle?


2. Given your answer to Q9, what must be the household’s optimal consumption of F & B
given their income (m)?

3. Suppose that the price of Films changed from $2 to $4. What would need to happen to
the MRS according to the optimality condition in Q9 if the household wanted to keep
maximizing its utility?

Consider an Individual who buys Films (F) and Books (B) with the following utility function:
U (F, B) = 2F¹/3B²/3
This individual also has the following incomes (m) and prices (pF and PB):
m = $30, pF
PF
Given the above, the Marginal Utilities of each Films (MUF) and Books (MUB) are:
2 F¹3
: $2,PB = $6
MUB = 2
-
3 B ¹/3
1B²/3
MUF = 2 2
3 F²/3
expand button
Transcribed Image Text:Consider an Individual who buys Films (F) and Books (B) with the following utility function: U (F, B) = 2F¹/3B²/3 This individual also has the following incomes (m) and prices (pF and PB): m = $30, pF PF Given the above, the Marginal Utilities of each Films (MUF) and Books (MUB) are: 2 F¹3 : $2,PB = $6 MUB = 2 - 3 B ¹/3 1B²/3 MUF = 2 2 3 F²/3
Expert Solution
Check Mark
Knowledge Booster
Background pattern image
Economics
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Text book image
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:9780190931919
Author:NEWNAN
Publisher:Oxford University Press
Text book image
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Text book image
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Text book image
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Text book image
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Text book image
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education