Problem 3 (10 points; 5 points for each part): Richard has a total utility function of: TU=10q₁ q₁² +2492-92² +9192, where q₁ and q2 are goods. Richard is currently consuming at q₁ = 4 and q₂ = 6, which is also his utility maximizing consumption level. (Richard's optimal point is an interior solution). (a) (b) How much additional utility would Richard receive if he were to increase his consumption of q2 from 6 to 7? (5 points). How much q2 is Richard willing to pay (in terms of q2) in order to consume the 5th unit of q₁? (5 points).

Problem 3 (10 points; 5 points for each part): Richard has a total utility function of: TU=10q₁ q₁² +2492-92² +9192, where q₁ and q2 are goods. Richard is currently consuming at q₁ = 4 and q₂ = 6, which is also his utility maximizing consumption level. (Richard's optimal point is an interior solution). (a) (b) How much additional utility would Richard receive if he were to increase his consumption of q2 from 6 to 7? (5 points). How much q2 is Richard willing to pay (in terms of q2) in order to consume the 5th unit of q₁? (5 points).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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