ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- please teach explain step by step,arrow_forwardJosh has a monthly income of $1000. He spends this income on gummy bears (G) and "other goods"(X). The first 2500 gummy bears always cost $0.2per unit. When buying more than 2500 gummybears, they are offered at a discounted price of $0.1per unit for any amount above 2500. The unit price of the "other goods" is $1. 1. Draw the budget set. 2. Using optimization techniques, determine Josh’s optimal bundle given that his preferencescan be represented by the utility functionU(G, X) =GX.Make sure to also Illustrate youranswer graphically. 3. Suppose instead that Josh’s utility function isV(G, X) =√GX−25. How would that changeyour answer to subquestion 2? Explain.arrow_forwardDev likes to consume scones (Good X) and cups of coffee (Good Y). Her utility functionis: U(x,y) = min{x, 2y}That is, her level of utility for any given bundle (x,y) is the lesser of x and 2y.Suppose the price of scones is $3 and the price of coffee is $2. Dev’s weekly budget is$20. Determine her optimal consumption bundle for a week.arrow_forward
- Several local golf tournaments are coming up and Tommy needs to purchase golf balls in preparation. He has set a $150 budget and will choose golf balls that will give him as much utility as possible. A local sporting goods store sells a box of golf balls at a retail price of $30 and Tommy purchases 2 boxes. A few buddies tell Tommy about an online store that offers boxes of golf balls at a discounted price of $21, while all other prices remain the same, and Tommy decides to purchase 3 additional boxes of golf balls to keep on hand. Given this information, plot Tommy's demand curve for golf balls. Provide your answer below: Price of Golf Ball Boxes Online Store (4,$22) 20 Local Store (1,$10) —101 Quantity of Golf Ball Boxesarrow_forwardAlex, who was convinced that "Football is coming home", was very excited for the World Cup last year. Unfortunately, he realized that his favourite Paul Gascoigne jersey from Euro 1996 was getting old, so he wanted to buy a new one before England's first game the following week. He could either buy a 2014 James Milner shirt from retailer A, which would make him totally happy (utility=1), or a 2006 David Beckham shirt from retailer B, which gives him a utility of 0.8. However, the shirts are not available today. There is a 50% chance that retailer A will have the shirt on the week-end, and 70% chance that retailer B will have theirs on the week-end. Due to time and work constraints, Alex can only visit one of these retailers before the tournament starts, otherwise he will have to keep his old 1996 shirt, which gives him a utility of 0.5. He can also ask his friend Nathan to check both places in the morning. But being a Welsh supporter, Nathan will not do it for free and wants some money…arrow_forwardIf you had a vacation budget of $3000 to take vacation(s) this fall, use utility analysis theory to predict which vacation that you would participate in this fall. You need to explain why you would take this vacation instead of another one that you were considering. Assume that you must take the vacation or all life on Earth would perish. I made that last assumption to prevent you from saying that you would just spend it to pay down bills or put it in savings. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward
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