3. U=x2/³/5, price of x = $6, price of y = $3, Utility = 1900. (Round quantities to the nearest whole number and spending to two decimal places.)
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- Janice really likes potatoes. Potatoes cost $1.10 per pound, and she has $6.00 that she could possibly spend on potatoes or other items. Suppose she feels that the first pound of potatoes is worth $1.50, the second pound is worth $1.14, the third pound is worth $1.05, and all subsequent pounds are worth $0.30. Instructions: Enter your answers as whole numbers. a. How many pounds of potatoes will she purchase? pound(s) of potatoes b. What if she only had $3.00 to spend? pound(s) of potatoesYou have $4,000 to spend on entertainment this year (lucky you!). The price of a day trip (T) is $40 and theprice of a pizza and a movie (M) is $20. Suppose that your utility function is U(T, M) = T3/4M1/4.a. What combination of T and M will you choose? b. Suppose that the price of day trips rises to $50. How will this change your decision?If 2 tacos and 3 drinks cost $12, and 3 tacos and 2 drinks cost $13, how much does a taco cost?
- Janice really likes potatoes. Potatoes cost $1.00 per pound, and she has $5.00 that she could possibly spend on potatoes or other items. Suppose she feels that the first pound of potatoes is worth $1.50, the second pound is worth $1.14, the third pound is worth $1.05, and all subsequent pounds are worth $0.30. Instructions: Enter your answers as whole numbers. a. How many pounds of potatoes will she purchase? b. What if she only had $3.00 to spend?3) Now suppose you have $500 to spend. You can buy computer software, which costs $50 or go on a ski trip for $100. Draw the budget set, labeling the end points. Just a pick a point on the budget set and tell how much of each good you bought. Suppose you now have $700 to spend. Draw the new budget set and pick a point for this budget set. Are you buying more or less software and ski trips after the income change?You have 6 hours to study for 2 exams tomorrow. The relationship between the time studying and test scores is shown below. Economics Psychology Hours 0 1 2 3 4 5 Score 63 71 78 84 89 93 96 Hours 0 1 2 3 4 5 6 Score 63 69 74 78 81 83 84 a. Use the rule for determining optimal purchases to decide how many hours you should study each subject. Treat each point on an exam like 1 unit of utility and assume you are equally interested in doing well in economics and psychology. You should study economics for hours and psychology for hours. b. Suppose now that you are a psychology major and that you value each point you earn on a psychology exam as being worth three times as much as each point you earn on an economics exam. Now how many hours will you study each subject? You should study economics for hours and psychology for hours.
- Assume someone has a utility function of U = Min[3X, Y]. They currently have 8 units of X and 3 units of Y. The price of X is $12 and the price of Y is $3. If this person could sell some units of X and/or Y what level of utility could they achieve?(a) A consumer has utility u(x,y,z) = ln(x) + 2ln(y) + 3ln(z) over the three goods, x,y and z and pz=1. Optimally she consumes 30 units of z. What is her income? How much money does she spend on x? (HINT: MUx = 1/x, MUy= 2/y, MUz = 3/z and remeber the "equivalent bang for the buck" condition). (b) Forget about (a). Suppose you have t= 29 hours in total to spend on 3 projects X,Y and Z to make some money. If you spend x hours on project X, you make 2 sqrt(x) dollars; If you spend y hours on project Y, you make 3 sqrt(y) dollars; If you spend z hours on project Z, you make 4sqrt(z) dollars; Writing down your "utility function" u(x,y,z) and the constraint, solve the utility maximization problem; what is the optimal amount of time to spend on x? on y? on z?3. Susan has the following utility function U(x,y) = xy, where x represents food and y represents other goods. Susan has £20 (budget m) to spend on these two goods. Suppose that the initial price of x (Px) is £1 per unit, and that of y (Py) is £1 per unit. Note that MUx=y and MUy=x. (i) How many units of x and y will Susan purchase? Assuming that Px varies and m and Py stay constant at the values £20 and £2, respectively, what is the individual demand function for x? (ii) What are the characteristics of the individual demand function for x? What is its aggregate counterpart, and what is its economic importance?
- 1. Suppose that on the island, the currency is shell beads. The going price for coconuts is 2.4 beads and that for fish is 1 bead. You earn 20 beads per period from your job as a harvester. Given the data in the table, your equilibrium or maximum satisfaction coconut-fish combination will be ____? coconuts and ____? fish. Explain why this will be the chosen combination. 2. Your total utility from the coconut-fish combination is ____?You have $3,000 to spend on entertainment this year (lucky you!). The price of a day trip (T) is $40 and the price of a pizza and a movie (M) is $20. Suppose that your utility function is U(TM) T1/3M2/3. a. What combination of T and M will you choose? b. Suppose that the price of day trips rises to $50. How will this change your decision?What is utility? the satisfaction a person gets from the consumption of a good a measure of production efficiency the difference between what a consumer is willing and able to pay for a good a measure of the amount of "need" people have for a good
