Society is made up of two individuals, Bert and Ernie, whose demands for public good A are given in the figure on the right. Bert's demand is: o = 50 – 2.0PA Ernie's demand is: of = 50 – 1.0PA Assume that the public good can be produced at a constant marginal cost of $10.

ê Suppie Concumer bes a utility function 4 x, (x,+2=) and facer a M. 'Derive and giet ber dem and for goed 2.

Ginny likes to eat Bertie Bott’s Every Flavour Beans (b), and Chocolate Frogs (f). Herpreferences over these lollies are Cobb-Douglas, and can be presented by the utility functionu(b, f) = 1/5(b − 2)(f + 3). Each Every Flavour Bean costs 25 Knuts and each Chocolate Frogcosts 12 Knuts. Ginny has 314 Knuts to spend. Assume that beans and frogs are both perfectlydivisible goods.(a) Find Ginny’s optimal bundle.(b) Suppose that Ginny is mugged by Draco on her way to the lolly cart, so that by the timeshe is there, she is left only with 75 Knuts. What is her optimal bundle now?(c) Now, consider the general case, where Ginny’s income is m, the price of Every FlavourBeans is pb, and the price of Chocolate Frogs is given by pf . In other words, treat ChocolateFrogs as the numeraire. Find Ginny’s demand for each good in terms of m, pb and pf .(d) Find the good on which Ginny will always spend more than half of her income.(e) Find the own-price, cross-price, and income elasticities of good 2…

The figure below show the initial optimal point of a family who has to decide how much kids (K) to have in 5 years and at the same time how much of all other goods to consumer (measured as composite good in dollars). Now assuming that kids are inferior goods/services, show the new optimal point as e2 if the income of the family increases. IC₁ to K

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Quantity of D 10 8 N 0 to 2 000 Refer to the budget line shown in the diagram. The absolute value of the slope of the budget line is Multiple Choice 4 6 8 10 Quantity of C two. one-half. five. ten. 20 10,981 AUG 22 < Prev 7 of 12 átv (@