ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Q.3 A utility function is given by the equation
U = 120 x0.7 y0.3
where x is the number of hours spent playing golf and y is the hours spent playing cards per
month. Calculate the values of x and y for which utility is maximised, subject to the constraint 21x + 3y = 180
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- Consider the following utility functions. G(x,y) = -1/[ min (6x, 2y)+1] H(x,y) = min (6x,6y) L(x,y) = min (6x,2y) - 10000000000 U(x,y) = min (3x, y) W(x,y) = min (6x, y) Z(x,y) = min (x,2y) Select the function or functions, if any, representing the same preferences as function U?arrow_forwardSolve the following utility maximization problem, max u (x1, x2) subject to Pix1 + p2x2 = I meaning find x (P1, P2, I) and x (p1, p2, I) and u* (p1, p2, I) = V * . In solving this optimization problem, assume the following functional form for the direct utility function, и (х1, X2) —а: · In(x1) + b· In(x2) where a and b are just parameters (i.e., representations of single numerical values). Assume that the Second-Order Conditions for a constrained maximum hold. Write clearly and show your work!arrow_forwardGreg has the following utility function: u=2057 20.43. He has an income of $96.00, and he faces these prices: (P1, P2) (9.00, 9.00). Suppose that the price of an increases by $1.00. Calculate the equivalent variation for this price change. =arrow_forward
- If the total utilities for the fifth and sixth units of a good consumed are 98 and 115 respectively. The marginal utility for the sixth unit is:arrow_forwardAnn's utility function is U = q1q2/(q1 + q2). Solve for her optimal values of q1 and q2 as a function of p1, p2 and Y.arrow_forwardPlease get correctarrow_forward
- Find the optimal bundle using the following utility functions and budget constraints. 1. U(x,y)=lnx+yand2x+y=10 2. U(x,y)=3x+2yand3x+2y=24 3. U(a,z)=3a+2zand3a+6z=24 4. U(a,z)=a2z2 and4a+2z=485. U(x,z)=a2z3 and3a+2z=36arrow_forwardFang likes playing badminton with her friends. Her utility function for playing badminton every week is given by U(t) = 11t – 2t2, where t is measured in hours. They play on a badminton court, which they can rent per hour. Suppose the current price to play on the badminton court is £2.50 per hour. How many hours should Fang play if she wishes to maximise her utility? Explain what we mean by the principle of diminishing marginal utility. Does the principle apply in Fang’s case? Explain why. In a diagram with income in pound sterling on the horizontal axis and quantity on the vertical axis, show the relationship between Fang’s budget and the number of hours that would maximise her consumer surplus.arrow_forwardGreg has the following utility function: u = x0.47x953. He has an income of $52.00, and he faces these prices: (p₁. p₂) = (1.00, 3.00). Suppose that the price of x, increases by $1.00. Calculate the equivalent variation for this price change.arrow_forward
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