Please answer just the number IV part. 1. Jesper consumes granola (g) and whole milk (w). His utility function is u(g, w) = 2/g+2 yw, and he has $120 to spend. Giant sells granola for $4 per pound and milk for $2 pergallon. Safeway sells granola for $2 per pound and milk for $4 per gallon.%3D(i) Find the optimal bundle if Jesper shops at Giant.(ii) Find the optimal bundle if he shops at Safeway.(iii) Explain why the bundle Jesper purchases at Giant would cost more at Safeway, andvice versa.|(iv) Suppose that Jesper can purchase from Sam's Club instead by paying an "entry fee," f,|and then paying prices $1.50 for granola and $3 for milk. Under what conditions willJesper choose to shop at Sam's Club? (Your answer will be an algebraic expressioninvolving f.)

Given Information U=2g+2WHere g=granolaW=Whole milkWhen Jesper buys from…

Answered: 1. Jesper consumes granola (g) and…

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter20: Consumer Choice: Maximizing Utility And Behavioral Economics

Section: Chapter Questions

Problem 5WNG

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1. Jesper consumes granola (g) and whole milk (w). His utility function is u(g, w) = 2/g+ 2 yw, and he has $120 to spend. Giant sells granola for $4 per pound and milk for $2 per gallon. Safeway sells granola for $2 per pound and milk for $4 per gallon. (i) Find the optimal bundle if Jesper shops at Giant. (ii) Find the optimal bundle if he shops at Safeway. (iii) Explain why the bundle Jesper purchases at Giant would cost more at Safeway, and vice versa. (iv) Suppose that Jesper can purchase from Sam's Club instead by paying an “entry fee," f, and then paying prices $1.50 for granola and $3 for milk. Under what conditions will Jesper choose to shop at Sam's Club? (Your answer will be an algebraic expression involving f.) 2. Manuel consumes pints of strawberries (s) and blueberries (b). His utility function is u(s, b) = s + 2b, the prices are ps 2 and pB = 3, and Manuel has $60 to spend. (i) Find Manuel's optimal bundle. (ii) Suppose that pB rises to 5, all else equal. Find the new…
Max is very peculiar about his morning coffee routine. He likes to use exactly two spoons of coffee for every six ounces of water. This give him the following utility function: U = min(2Water, 6Cof fee), where Water (W) is measured in fluid ounces and Coffee (C) in spoons. (a) afford while utility-maximizing? How many spoons of coffee does he use in doing so? (b) If he spends exactly $2 on coffee every morning, how many 8 ounce cups of coffee can he How much utility does Max get from his morning cup/s of coffee?
Question 2 David spends his budget on chocolate and chip. His utility function is given by ?(?1,?2)= 2?1?2, where ?1 is the number of chocolates he consumers per week, and ?2 is the number of chips he buys per week. A chocolate costs 10 SEK, and a chip costs 20 SEK. David’s weekly budge for consuming on these two goods is 120 SEK. (1) What is David’s budge line? Draw the budget line on a graph with chocolate amounts on the horizontal axis and chip amounts on the vertical axis. Write explicitly at which points budget line crosses the axis. (2) What is David’s marginal utilities for the two goods, respectively? What is his marginal rate of substitution between the two goods? (3) What is David’s optimal choice? Calculate the numerical answer for the optimal bundle. Also draw an indifference curve for David on the same graph as question(1) and show the optimal bundle.
You have the Cobb-Douglas utility function u(x,y) = xy over apples (x) and plums (y) and you have $120 budget to spend and can carry at most 480 ounces in weight in your backpack going back to the dorm. Each apple costs $1 and weighs 8 ounces, and each plum costs $3 and weighs 4 ounces. You can only leave the store with a bundle of fruits you can afford and carry. (a) Drawing the relevant lines, intercepts, marking the points and hence identifying the feasible set of bundles, calculate the optimal bundle. (b) Forget about (a). If you were to choose a backpack before going on this shopping trip, for the weight constraint not to be an issue for you, how many ounces of weight capacity would you need for your backpack? HINT: That is, for this weight capacity of the backpack, you’d be able to carry the best bundle you can afford, i.e, the weight constraint is not binding for your decision. ( c) Forget about (b). In (a), just before going out for shopping with your backpack to buy the…
Jane spends $210 per month on wine and beer. Her utility function is given by TU = 100WB, where W represents the number of bottles of wine that she buys and B represents the number of cases of beer that she buys. If wine costs $10 per bottle and beer costs $15 per case, she will maximize utility by buying: 10 bottles of wine and 13.33 cases of beer. equal amounts of wine and beer. none of the above. 10.5 bottles of wine and 7 cases of beer. 2 bottles of wine and 3 cases of beer.
Karen has perfect complement preferences over toothbrushes B and toothpaste P, with the associated utility function U(B,P) = min (3B, 2P). Suppose the price of a toothbrush is $6, the price of toothpaste is $4 a tube, and she has $72 to buy her entire year's supply of toothbrushes and toothpaste. How many toothbrushes and tubes of toothpaste will she buy?
Summer break is approaching! Suppose you derive utility from days spent traveling on vacation domestically, D, and days spent traveling on vacation in a foreign country, F. Your utility function over these two “goods” is: U(D, F) : 4D0.25F 0.75 Let your budget constraint be I(D, F) = pDD + pF F; where I is your income, pD is the price of domestic travel per day, and pF is the price of foreign travel per day. a. Determine the demand functions for domestic travel and foreign travel. Make sure you show your work – show the steps used. b. Suppose that you’ve saved $800 for your summer travel, the price of domestic travel per day is $25 and the price of foreign travel per day is $100. How many days of each type of travel will you embark on? c. Illustrate the indifference curve, budget constraint, and the utility maximizing bundle associated with (b). Make sure you show the level of utility, the budget constraint intercepts, and the optimizing equilibrium.
Harmon's utility function is U(x1, x2) = x1x2. His income is $80. The price of good 2 is p2 = 4. Good 1 is priced as follows: the first 15 units cost $4 per unit and any additional units cost $2 per unit. What consumption bundle does Harmon choose? a) (12.5, 12.5). b) (25, 12.5). c) (12.5, 25). d) (15, 10). e) none of the above.
4. Minnie enjoys dessert by eating chocolate cake (C) and apple pie (P) according to the utility function U = Min [C, P]. In any given week, Minnie %3D spends £20 to purchase these two products. Assume that Minnie is a utility maximiser and has to pay 50p for a unit of apple pie and £2 for a unit of chocolate cake. (i) Consider the bundle C = 20 and P = 5. Is this the utility maximizing choice subject to Minnie's budget?. %3! (ii) Suppose that Minnie chooses the exact bundle that maximizes her utility. How would the utility maximizing choice of C be affected if price of P went up? (iii) Explain under which conditions the tangency condition does not work. Given that the tangency condition does not work, discuss how we can find out the optimal consumption bundle for a consumer.
The utility function for Morris is U = min {AM, T}, where M is pints of milk and T is cans of tuna. Morris has S90 to spend or tuna (prices at $2 per can) and milk (priced at $1 per pint). What is Morris's utility-maximizing consumption bundle? 1)M = 40 and T= 25 2)M= 15 and T= 65 3)M= 10 and T= 40 4)M= 30 and T= 30
Sam's extended family spends $3,200 per month on wine and beer. Their utility function is given by U = 200WB, where W represents the number of bottles of wine that they buy, and B represents the number of cases of beer that they buy. Wine costs $25 per bottle and beer costs $32 per case. Sam's family wants to maximize their utility. Calculate how many bottles of wine and how many cases of beer they should buy. Show your calculation(s).
Hot-dogs (P = $1) Apple pie slices (P=$2) Hot-dogs Total MUMU/P Apple pie Total MUMU/P ConsumedUtility ConsumedUtility 1 7 1 14 2 13 26 3 18 3 36 4 22 4 44 5 25 5 50 6. 27 54 7 28 7 56 Assume that hot-dogs cost $1 and apple pie slices cost $2. Your budget is $9. (MU is marginal utility; MU/P is marginal utility divided by price) 1) Fill in the table. For each good, calculate the marginal utility (MU) and the marginal utility per dollar (MU / P). 2) The marginal utility of consuming the second hot dog is 3) The marginal utility of consuming the 6th apple pie slice is The optimal bundle of goods that maximizes 4) your total utility (and you don't overspend) is: dogs and hot- apple pie slices. Explain how you found it.

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