Question 3 Part a John has $100 that he can spend on milk and gas. A gallon of milk costs $5. However, government gives its citizens a coupon that entitles people to 20% discount on their first 10 gallon milk purchases. Gas costs $4 per gallon and government charges $1 for each gallon of purchased gas. John's utility function is U(x, y) = 9x+10y, where x and y represent gallons of milk and gas consumed, respectively. What is John's optimal consumption of milk and gas?

Question 3 Part a John has $100 that he can spend on milk and gas. A gallon of milk costs $5. However, government gives its citizens a coupon that entitles people to 20% discount on their first 10 gallon milk purchases. Gas costs $4 per gallon and government charges $1 for each gallon of purchased gas. John's utility function is U(x, y) = 9x+10y, where x and y represent gallons of milk and gas consumed, respectively. What is John's optimal consumption of milk and gas?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter6: Consumer Choices

Section: Chapter Questions

Problem 1SCQ: Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can...

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jamie has $100 that he can spend on milk and gas. A gallon of milk costs $5.However, government gives its citizens a coupon that entitles people to 20%discount on their first 10 gallon milk purchases. Gas costs $4 per gallon andgovernment charges $1 for each gallon of purchased gas. Jamies utility functionis U (x, y) = 9x+10y, where x and y represent gallons of milk and gas consumed,respectively. What is Jamies optimal consumption of milk and gas?Part bIf government removes the quantity restriction to which the coupon applies (i.e.20% discount is applied to any quantity of milk purchased), what will be jamieoptimal consumption?
3. Suppose that Omar’s marginal utility for cups of coffee is constant at 1.5 utils per cup, no matter how many cups he drinks. On the other hand, his marginal utility per doughnut is 10 for the first doughnut he eats, 9 for the second he eats, 8 for the third he eats, and so on (that is, declining by 1 util per additional doughnut). In addition, suppose that coffee costs $1 per cup, doughnuts cost $1 each, and Omar has a budget that he can spend only on doughnuts, coffee, or both. How big would that budget have to be before he would spend a dollar buying a first cup of coffee? *use tables and/or graphs if possible, please original work
2) Suppose Kelvin receives RM400 allowance a month and he only spends on other goods and food. In the first year, the price of food is RM4 per kg and the price of other goods is RM1 per unit. His utility function is U-20√GF, where G represents other goods and F represents food. In the second year, prices of both commodities increased by RM1 each due to tax. a) Assuming Kelvin maximizes his utility subject to his allowance, how much food and other goods were consumed in the first year? b) In the second year, if his allowance did not increase, how will this affect his food, other goods consumption, and his utility? c) Suppose he received rebates that reflect the true cost of living (an inflation index that holds utility constant over time: ideal cost of living), what is his level of food and other goods consumption under this circumstance? How much compensation did he receive? d) If Kelvin was given a rebate such that he could still enjoy his bundle of goods in the first year, how much…
48 aces How big would that budget have to be before he would spend a dollar buying a first cup of coffee? Instructions: Enter your answer as a whole number. here to search Suppose that Omar's marginal utility for each additional cup of coffee is 2.5 utils per cup no matter how many cups he drinks. On the other hand, his marginal utility per doughnut is 10 for the first doughnut he eats, 9 for the second he eats, 8 for the third he eats, and so on (that is, declining by 1 util per additional doughnut). In addition, suppose that coffee costs $1 per cup, doughnuts cost $1 each, and Omar has a budget that he can spend only on doughnuts, coffee, or both. O Saved II Help 4 Saw
Suppose that Omar’s marginal utility for cups of coffee is constant at 5.5 utils per cup no matter how many cups he drinks. On the other hand, his marginal utility per doughnut is 11 for the first doughnut he eats, 10 for the second he eats, 9 for the third he eats, and so on (that is, declining by 1 util per additional doughnut). In addition, suppose that coffee costs $1 per cup, doughnuts cost $1 each, and Omar has a budget that he can spend only on doughnuts, coffee, or both. How big would that budget have to be before he would spend a dollar buying a first cup of coffee?
The government of the island nation of Autarka has become increasingly concerned aboutthe health and wellbeing of low income households. Medical experts stress the importanceof a healthy diet in this regard. They have determined that, ideally, a household wouldconsume at least 5kg of fresh fruit and vegetables each week.The government has proposed implementing a new voucher scheme to ensure that the5kg per week consumption target is met. Under the government’s proposal, the voucherswould be redeemable for fresh fruit and vegetables, but could not be used for other typesof food, or for non-food consumption. Moreover, to limit the cost of the voucher scheme,the value of the vouchers sent to a household would be linked to the household’s income.Community groups in Autarka have expressed concern that a voucher scheme is unnec-essarily paternalistic; depriving low income households of the choice of how to spend theirincome. These groups argue that the government’s consumption targets could…
Suppose that Omar's marginal utility for each additional cup of coffee is 1.5 utils per cup no matter how many cups he drinks. On the other hand, his marginal utility per doughnut is 11 for the first doughnut he eats, 10 for the second he eats, 9 for the third he eats, and so on (that is, declining by 1 util per additional doughnut). In addition, suppose that coffee costs $1 per cup, doughnuts cost $1 each, and Omar has a budget that he can spend only on doughnuts, coffee, or both. What is the minimum value of Omar's budget if he purchases one cup of coffee? Instructions: Enter your answer as a whole number.
True or false with reasoning: 1) _______When we claim that utility can be ordinally measured, we assume that the consumer is able to measure the total and marginal utility received when one extra unit of a commodity is consumed. 2)_______If MRS between two goods is constant, then having more of one good without having more of the other does not increase utility. 3)_______Marginal Utility increases until total utility is at a maximum and then marginal utility decreases.
Carl has $8 to spend on some combination of apples, bananas, and coconuts. Apples and bananas cost $1 each, while coconuts cost $2 each. The table below shows the total utility obtained per good, given the quantity purchased. To maximize the sum of his utilities from apples, bananas, and coconuts, how many of each fruit should car purchase? _____ Apples? _____ Bananas? _____ Coconuts? In doing so, he obtains a total utility of ____ from consuming all of his fruit.
3- If the quantity of good A (QA) is plotted along the horizontal axis, the quantity of good B (QB) is plotted along the vertical axis, the price of good A is PA, the price of good B is PB and the consumer's income is I, then the slope of the consumer's budget constraint is: 1374200. a) b) d) I/PA or I/PB. -QB/QA. -PB/PA. -QA/QB. -PA/PB.
suppose the government of a desert community wants to punish excessive water useage, where "excessive" is defined as any usage greater than 100 gallons/week. to do this, the government paces a flat $100 income tax on anyone who consumes more than 100 gallons/week of water in any given week (so this tax could theoretically be levied 52 times per year). people who use less than 100 gallons of water each week will not face this $100 special tax. For these problems, consider the decisions between water consumption, X(sub)w and consumption of a composite good, X(sub)c, where P(sub)w =$2/gallon and the composite good's price is numeraire. suppose michael lives in this desert community and has a weekly income of $1000. 1. graphing michels budget contraint over (X(sub)w , X(sub)c) bundles, what is the slope of his budget conraint for bundles containing MORE than 100 gallons of water? 2. What is the slope of michaels budget constraint at the point (X(sub)w, X(sub)c)=(100,750)? 3. what is the…
2. Alex and Bill share a flat. Alex enjoys reading in silence, while Bill enjoys listening to loud music. Bill controls his music system, which can produce noise levels up to 100 Decibels. Bill has no cash but Alex has £100. Their utility functions are given by: UA = 10(100 – D)i + (100 – M), %3D Ug = 10(D)i + M, where D denotes the Decibel level chosen by Bill, and M denotes any cash given to Bill by Alex. (a) Explain how Bill's music level affects Alex. Find the contract curve between Alex and Bill. Why is there a unique Pareto efficient noise level? (b) What is the maximum amount Alex would be willing to pay Bill to turn down the music to the Pareto efficient level? What is the minimum amount Bill would be willing to accept in order to turn down the music to the Pareto efficient level? Can the Pareto efficient noise level be achieved through private bargaining?