5. Suppose u(x) = max{ar₁, ßr2} for parameters a, ß > 0).(a) Will this consumer will spend all their money (i.e. choose z so thatpx = m)? Why or why not?(b) Show that either r = 0 or r2 = 0 that is, the consumer buys only oneof the two goods.(c) Solve the consumer's problem. What is z? [Hint 1: The first question,and the previous part of this question, might be helpful here. Hint 2: Theprice ratio might be relevant to the consumer's behavior.]

Given: Utility function u(x)=Maxαx1,βx2

Suppose u(x) = max{arı, ßr₂} for parameters a, ß > 0. (a) Will this consumer will spend all their money (i.e. choose z" so that px = m)? Why or why not? (b) Show that either i - of the two goods. 0 or r2 = 0 that is, the consumer buys only one (c) Solve the consumer's problem. What is ? [Hint 1: The first question, and the previous part of this question, might be helpful here. Hint 2: The price ratio might be relevant to the consumer's behavior.] בין

Suppose u(x) = max{arı, ßr₂} for parameters a, ß > 0. (a) Will this consumer will spend all their money (i.e. choose z" so that px = m)? Why or why not? (b) Show that either i - of the two goods. 0 or r2 = 0 that is, the consumer buys only one (c) Solve the consumer's problem. What is ? [Hint 1: The first question, and the previous part of this question, might be helpful here. Hint 2: The price ratio might be relevant to the consumer's behavior.] בין

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Joe Bob from Workout Problem 4.12 has a cousin Don who consumes goods 1 and 2. Don thinks that 3 units of good 1 is always a perfect substitute for 2 units of good 2. Which of the following utility functions is the only one that would not represent Don's preferences? U(x1, x2) = min{2x1, 3x2}. Ux1, x2) = 20x1 + 30x2 - 10,000. Ux1, x2) = 2x1 + 3x2 + 1000. Ux1, x2) = 4x²2₁ + 12x₁x2 + 9x²₂. More than one of the above does not represent Don's preferences.
Suppose a consumer's utility is given by: u (x1, x2) = a/xT + b/x2 Where a= 8, and b = 4 %3D What is the value of MU1 (x1, X2)when x1=9 and x2=8. (Note: The answer may not be a whole number, so round to the nearest hundredth) (Note: The numbers may change between questions, so read carefully)
e(p, v(p, w)) = v(p, w) - ((p1 * w1) + (p2 * w2)) how to map the correct numbers: there four prices one for the inital then ther other ((p1 * w1) + (p2 * w2))
D, E
Please help me to solve the questions below.
You have k20per week to spend and two possible uses for this money,:telephoning friends back home and drinking coffee. Each hour of phoning costs k2 and each cup of coffee costs k1. Your utility functions U(X,Y)=XY,where X is the hours of phoning you do and Y the number of cups of coffee you drink. Now suppose the price of telephone calls drops to k1 per hour. What are your optimal choices? What is the resulting utility level
H1
QUESTION 1 x0.80Qy(1-0.80); and the budget 153 = 11Qx + 12Qy find the CHANGE in optimal consumption of X if the price of X increases by a factor of 1.9. as a positive number with 1 decimal and 5/4 rounding (e.g. 1.15 1.2, 1.14 = 1.1). Qx For the utility function U = Please enter your response
All parts needed! :)
Happy Goluki likes tea (good 1) and cookies (good 2). Her preferences are represented by the utility function U(q₁,92) = (q₁)⁰.5+(q₂)0.5, where q₁ is the number of cups of tea and q2 is the number of cookies. Goluki is given I = $180, which she is allowed to spend as she wishes on tea and cookies. a) Calculate Goluki's optimal bundle if the price of tea is p₁=$1 and the price of cookies is p2=$2. Call this bundle A and show it on a graph (put tea on the horizontal axis). b) Suppose that the price of tea increases to $5 (I know, I can't believe it either, but Melbourne does have some very fancy tea places) and the price of cookies stays the same. Calculate Goluki's new optimal bundle of tea and cookies (call it bundle B). Show it on a graph from part a). c) If at new prices (pnew-$5 and p2=$2) Goluki has just enough income to achieve the same utility as in part (a), what bundle will she buy? Calculate this new bundle D and show it on the graph from part a). Calculate the income required…
PROBLEM (4) You have the Cobb-Douglas utility function u(x, y) = xy over apples (x) and plums (y) and you have $120 budget to spend and can carry at most 480 ounces in weight in your backpack going back to the dorm. Each apple costs $1 and weighs 8 ounces, and each plum costs $3 and weighs 4 ounces. You can only leave the store with a bundle of fruits you can afford and carry. (a) Drawing the relevant lines, intercepts, marking the points and hence identifying the feasible set of bundles, calculate the optimal bundle. (b) Forget about (a). If you were to choose a backpack before going on this shopping trip, for the weight constraint not to be an issue for you, how many ounces of weight capacity would you need for your backpack? HINT: That is, for this weight capacity of the backpack, you'd be able to carry the best bundle you can afford, i.e, the weight constraint is not binding for your decision. (c) Forget about (b). In (a), just before going out for shopping with your backpack to…
Your own a chocolate producing company which can advertise on both television (T) and internet(I). The effect of TV and online commercials on sales is again given byS(T,I) = 500 + 48T−6T2+ 112I−6I2+ 4TI. You have a budget of $25 that you can spend on T and I. The price of aTV commercial is $12per unit and the price of an online commercial is also $12 per unit. 1. Determine the optimal level of TV commercials T and online commercials I if you have to spend all of your budget. You should provide two methods to solve this, by direct substitution and by setting up the Lagrangian. Is the Lagrange multiplier positive or negative? Give an intuitive interpretation of why this is the case? 2. Now determine the optimal level of TV commercials T and online commercials I if you DO NOT have to spend all of your budget. Do you obtain the same answer as subquestion 5.1? What is the Lagrange multiplier equal to in this case? Discuss.