Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Question
Chapter 21, Problem 16E
To determine
Jorge's loss of utility is greater than Mary.
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Students have asked these similar questions
A consumer can consume two goods, A and B, and has the utility function U-15A1/281/2, The consumer's budget is $900,
the price of good A is $15 per unit and the price of good B is $45 per unit. (Assume A is the horizontal axis good and B is the
vertical axis good. Both goods are infinitely divisible, but round numerical answers to 2 decimal places as necessary)
What is the consumer's marginal rate of substitution?
What is the consumer's marginal rate of transformation?
What is the formula for the consumer's budget constraint?
What is the consumer's utility-maximizing bundle given the utility function and budget constraint?
A
B
H
Enrique is a movie buff. He likes to watch on demand movies from
his cable company, which cost $5 each, and so likes to go to
the local movie house, which charges $15 a ticket. Suppose that
given his budget and his tentative spending plans, the marginal
utility from a cable movie is 15 utils and the marginal utility of a
movie at the local cinema is 45 utils.
Assuming he is spending his entire budget,
Enrique is currently maximizing his utility
Enrique can increase his utility by buying more cable movies
and watching fewer cinema movies
Enrique can increase his utility by buying more cinema
movies and fewer cable movies
Every week since lockdown, Jack spends his entire budget to purchase 2 boxes of
fried chicken and 3 cream puffs. Each box of fried chicken costs $8 and each cream
puff costs $5. Suppose Jack's marginal utility from fried chicken is 12, and his
marginal utility from cream puffs is also 12. What should Jack do if he wants to
increase his utility?
a) Increase fried chicken consumption and reduce cream puff consumption.
b) Increase both cream puff and fried chicken consumption.
c) Maintain current consumption.
d) Increase cream puff consumption and reduce fried chicken consumption.
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- Suppose that you are given $20,000 to split between two people, Jane and Fred. The income and marginal utility for each of them is shown in the following table. Amount to Jane Amount to Fred MU of Jane's Last Dollar Spent MU of Fred's Last Dollar Spent $ 5,000 $ 15,000 80 65 $ 7,000 $ 13,000 70 70 $ 9,000 $ 11,000 60 75 $ 11,000 $ 9,000 50 80 $ 13,000 $ 7,000 40 85 Instructions: Enter your answers as a whole number. If you want to maximize their combined utility, how much of the $20,000 should go to Jane? How much should go to Fred? Amount to Jane = $ Amount to Fred = $arrow_forwardYou are choosing between two goods, X and Y, and your marginal utility from each is as shown in the following table. If your income is $9 and the prices of X and Y are $2 and $1, respectively, what quantities of each will you purchase to maximize utility? What total utility will you realize? Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase? Using the two prices and quantities for X, derive a demand schedule (a table showing prices and quantities demanded) for X.arrow_forwardEach day Paul, who is in third grade, eats lunch at school. He only likes Twinkies (T) and Orange Slice (S), and these provide him with a utility of Required a) If Twinkies cost $ 0.10 each and Slice costs $ 0.25 per cup, how would Paul spend the $1 his mother gives him in order to maximize his utility? b) Suppose the school try to discourage Twinkle consumption by raising the price to $ 0.40, kindly decompose the total price effect on demand into substitution and income effect. (assume that it is possible to purchase fractional amounts of both goods)arrow_forward
- Please provide full derivation, and 5. Casper consumes cocoa and cheese. Cocoa is sold in an unusual way. There is only one supplier, and the more cocoa you buy from him, the higher the price you have to pay per unit. In fact y units of cocoa will cost Casper y2 dollars. Cheese is sold in the usual way at a price of 2 dollars per unit. Casper's income is 20 dollars and his utility function is U(x, y)=x+2y, where x is his consumption of cheese and y is his consumption of cocoa. a. Sketch Casper's budget set and shade it in. b Sketch some of his indifference curves and label the point that he chooses. c. Calculate the amount of cheese and the amount of cocoa that Casper demands at these prices and this income.arrow_forward4. Two individuals, Amir and Budi, consume two goods, clothes (X) and shoes (Y). The utility functions for the two individuals are given as: Utility function of Amir, UA = 15X0.25Y0.75Utility function of Budi, UB = 25X0.5Y0.5 The current price for clothes (Px) is Rp 100,000 and the current price for shoes (PY) is Rp 150,000 a. Determine marginal rate of substitution (MRSXY)between clothes (X) and shoes (Y) for Amir and Budi! Please explain. b. Amir is currently consuming 5 units of clothes (X) and 10 units of shoes (Y), whereas Budi is consuming 12 units of clothes (X) and 8 units of shoes (Y). At this current consumption, have Amir and Budi reached the efficient allocation of clothes and shoes? If they have, explain why. If they have not, calculate the optimal allocation and explain. c. Considering the relative price between of clothes and shoes, at the current consumption, have Amir and Budi reached exchange equilibrium? Please explain d. Use the Edgeworth Box to illustrate the…arrow_forward4. Two individuals, Amir and Budi, consume two goods, clothes (X) and shoes (Y). The utility functions for the two individuals are given as: Utility function of Amir, UA = 15X0.25Y0.75Utility function of Budi, UB = 25X0.5Y0.5 The current price for clothes (Px) is Rp 100,000 and the current price for shoes (PY) is Rp 150,000 a. Determine marginal rate of substitution (MRSXY)between clothes (X) and shoes (Y) for Amir and Budi! Please explain. b. Amir is currently consuming 5 units of clothes (X) and 10 units of shoes (Y), whereas Budi is consuming 12 units of clothes (X) and 8 units of shoes (Y). At this current consumption, have Amir and Budi reached the efficient allocation of clothes and shoes? If they have, explain why. If they have not, calculate the optimal allocation and explain. c. Considering the relative price between of clothes and shoes, at the current consumption, have Amir and Budi reached exchange equilibrium? Please explain d. Use the Edgeworth Box to illustrate the…arrow_forward
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