Sylvester and Rachel live together on an island with two goods, food and shelter. Food is a private good and shelter is a public good. The utility function of Sylvester is U= Fs+ 2(Zs+ Zr) where Fs is the amount of food he buys, Zs is the amount of shelter he buys and Zr is the amount of shelter Rachel buys. Similarly, the utility function of Rachel is U= Fr+ Zs+ Zr where Fr is the amount of food she buys. Suppose the price of food is 10 and both Sylvester and Rachel have 100 to spend. Suppose also that it is not possible for Sylvester and Rachel to reach any kind of agreement. a. Determine the quantity of shelter they will buy and the efficient quantity of shelter if the price of shelter is 5? (Enter your answer in whole number.) Quantity of Shelter: Efficient 120 units b. What is the quantity of shelter they will buy if the price of the shelter is 15? (Round your answer Quantity of Shelter: Not Efficient 30 units 2 decimal places (e.g., 32.16).) What is the quantity of shelter they will buy if the price of the shelter is 25? (Enter your answer as a whole number.) Quantity of Shelter: (Click to select) units

Sylvester and Rachel live together on an island with two goods, food and shelter. Food is a private good and shelter is a public good. The utility function of Sylvester is U= Fs+ 2(Zs+ Zr) where Fs is the amount of food he buys, Zs is the amount of shelter he buys and Zr is the amount of shelter Rachel buys. Similarly, the utility function of Rachel is U= Fr+ Zs+ Zr where Fr is the amount of food she buys. Suppose the price of food is 10 and both Sylvester and Rachel have 100 to spend. Suppose also that it is not possible for Sylvester and Rachel to reach any kind of agreement. a. Determine the quantity of shelter they will buy and the efficient quantity of shelter if the price of shelter is 5? (Enter your answer in whole number.) Quantity of Shelter: Efficient 120 units b. What is the quantity of shelter they will buy if the price of the shelter is 15? (Round your answer Quantity of Shelter: Not Efficient 30 units 2 decimal places (e.g., 32.16).) What is the quantity of shelter they will buy if the price of the shelter is 25? (Enter your answer as a whole number.) Quantity of Shelter: (Click to select) units

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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