ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Using the following utility schedule, derive a
curve for pizza.
- Assume income is $10, the
price of each slice of
pizza is $1, and the price of each glass of beer is $2.
Then change the price of pizza to $2 per slice.
- Now change income to $12 and derive a demand
curve for pizza.
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- Suppose that, by law, a person is required to consume a fixed amount of good X, say X0. Assuming X is a normal good, explain how this law reduces utility for both high and low income people.arrow_forwardThe marginal utility for shoes and coffee is given below for five individuals. A pair of shoes costs $2, and a cup of coffee costs $1. Which of these consumers are optimizing over their choices? Explain For those who are not, how should they adjust their spending? Explain “Pasta is Miguel’s favorite meal therefore the law of diminishing marginal utility does not apply”. Do you agree with this statement? It is known that the indifference curve is convex. What does this tell you about the relationship between the goods? The income effect and the substitution effect work in the same direction for a normal good. Explain how this differs for an inferior good.arrow_forwardSuppose the marginal utility of a Coke is 15 utils, and its price is $1.50. The marginal utility of a pizza is 20 utils, and its price is $5. To achieve consumer equilibrium, you need to spendarrow_forward
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