Suppose the total utility function for the consumer who is consuming two goods, good x and good z is U(x, z) = ln(2x) + 2lnz.  The consumer’s income is $16 and is faced with the prices of each unit of good x and good z.  The price per unit of good x is $4 and the price per unit of good z is $1.  How many units of good x and good z should the consumer consume so as to maximize his/her utility?  Also, what will be the total utility earned from the consumption of that many units of good x and good z?

B. suppose that the steel firms costs are shown below. Fill the table. Q TFC TVC TC MC TR MR PROFIT/LOSS 400 100 400 50 200 400 100 300 400 130 400 400 180 500 400 220 600 400 350 700 400 450 400 800 price of steel is P150/unit 600

Suppose a consumer’s utility function is u = x_1^(3/2) x_2^(3/2) . She spends her budget of £27 for two goods. The prices of both goods are p1 = 6 and p2 = 6 Now suppose that instead both goods are priced as follows: There is a discount of 50% on the price of good 1 on each additional unit in excess of 3 units, and there is a discount of 50% on the price of good 2 on each additional unit in excess of 3 units. Draw the new budget constraint and derive it analytically.

Assume that the price of oranges is $2 and the price of starfruit is $1.  You have $10 of income to spend on both goods, and you intend to spend the entire amount.  Note that MU stands for marginal utility. Q of oranges       MU from oranges       Q of starfruit       MU of starfruit          1                           $20                             1                         $12          2                             16                             2                           10          3                             12                             3                             8          4                              8                              4                             6          5                              4                              5                             4          6                              0                              6                             2 To maximize total utility, you would consume _____ oranges and _____ starfruit.   Question 25…