A utility function is given as U = √MB where B represents the quantity of books consumed and M represents magazines. This uility is shown via indifference curves in the diagram to the right. Holding the number of magazines constant at 20 units, as we increase our consumption of books from 5 units to 10 to 15 and to 20 units, marginal utility with respect to books is Magazines (Y) 50 45- 40 35 30- 25- 20- 15- 10- 5- 04 RSTV 10 15 20 25 30 35 40 45 5

A utility function is given as U = √MB where B represents the quantity of books consumed and M represents magazines. This uility is shown via indifference curves in the diagram to the right. Holding the number of magazines constant at 20 units, as we increase our consumption of books from 5 units to 10 to 15 and to 20 units, marginal utility with respect to books is Magazines (Y) 50 45- 40 35 30- 25- 20- 15- 10- 5- 04 RSTV 10 15 20 25 30 35 40 45 5

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 3SQ

See similar textbooks

Similar questions

Is it possible for total utility to increase while marginal utility diminishes? Explain.
Take Jeremys total utility information in Exercise 6.1, and use the marginal utility approach to confirm the choice of phone minutes and round trips that maximize Jeremys utility.
Please no written by hand and no emage Consider a consumer that consumes 2 teaspoons of sugar with each cup of coffee. For each cup of coffee with sugar the consumer gains 10 utils.a) Write down the utility function that gives the total utility if the consumer consumes S teaspoons of sugar and C cups of coffee. The consumer has assigned £7 per week to be spent on drinking coffee with sugar. The current price of coffee is £0.50 per cup and each spoon of sugar costs £0.10. b) Calculate the optimal weekly consumption bundle for this consumer.c) Does the consumer view C and S as complements or substitutes?
On a given evening, J. P. enjoys the consumption of cigars (c) and brandy (b) according tothe functionU(c, b) = 20c− c²+ 18b − 3b²a. How many cigars and glasses of brandy does he consume during an evening? (Cost isno object to J. P.)b. Lately, however, J. P. has been advised by his doctors that he should limit the sum ofglasses of brandy and cigars consumed to 5. How many glasses of brandy and cigarswill he consume under these circumstances?
3. Suppose Mary enjoys Pepsi and Coke according to the functionU(P;C) = 4C + 5P. What does her utility function say about her MRS of Coke for Pepsi? What do her indi§erence curves look like? What type of goods are Pepsi and Coke for Mary? If Pepsi and Coke each cost $1 and Mary has $20 to spend on these products, how many units of each product should she buy in order to maximize her utility? Show this utility maximiz- ing combination combination of Pepsi and Coke on the graph. how would her consumption and utility maximizing bundle of Coke and Pepsi change if the price of Coke decreases to 50 cents. 4. Vera is an impoverished graduate student who has only $100 a month to spend on food. She has read in a government publication that she can assure an adequate diet by eating only peanut butter and carrots in the Öxed ratio of 2 pounds of peanut butter to 1 pound of carrots, so she decides to limit her diet to that regime. a) If peanut butter costs $4 per pound and carrots cost $2 per…
Units of the Good 0 1 5678AWN2 3 4 Total Utility Total Utility of X of Y 0 0 620 1740 1120 3030 1500 3960 1820 4710 2080 5280 2300 5730 2460 6060 2580 6300 For the next 3 questions, assume that an individual consumes two goods X and Y. The total utility (assumed measurable) of each good is independent of the rate of consumption of other goods. The prices of X and Y are, respectively, $20 and $30. If the consumer buys the fourth unit of X the Marginal Utility per Dollar Spent on X is 16 I If the consumer has $210 to spend on X and Y, the utility-maximizing bundle is The minimum budget necessary to move to a higher equilibrium consumption of X and Y is $ unit(s) of X and unit(s) of Y.
Consider a consumer that consumes 2 teaspoons of sugar with each cup of coffee. For each cup of coffee with sugar the consumer gains 10 utils. a)Write down the utility function that gives the total utility if the consumer consumes S teaspoons of sugar and C cups of coffee. The consumer has assigned £7 per week to be spent on drinking coffee with sugar. The current price of coffee is £0.50 per cup and each spoon of sugar costs £0.10. b)Calculate the optimal weekly consumption bundle for this consumer. c)Does the consumer view C and S as complements or substitutes?
Amadea spends all her income on pizza,chocolate milk, and music streams. The price of pizza is $4 per slice and price ofchocolate milk $2 per bottle. At Amadea's current consumption level, her marginalutility for pizza is 50 units per slice and for music 100 units per stream. Assuming thatAmadea is a utility maximizer, how much is (a)her current marginal utility for a bottleof chocolate milk, and (b) the price of streams she buys. Show your work. [Hint: Ch 6:Utility-maximizing formula)
The following gives the marginal utility of John’s consumption of three goods A, B and C.Unit of consumption MUaMUbMUc1202545218203031615244141018512815610612 Goods A, Band C costs ksh2, ksh1 and ksh3 respectively. How many units of each good should a consumer take to maximize utility with an income of ksh12
12. What are the mathematical steps in deriving demand and indirect utility?
11) Stanley consumes only white and red wines and his utility function can be describedby U(R,W) = R0.40∙W0.60, where R is the number of bottles of red wine and W is the4number of bottles of white wine that he consumes per month. Suppose that his income is$500 and the price of a bottle of red wine $20 and the price of a bottle of white wine is$15. In this case, Stanley will purchase _____ bottles of red wine and _____ bottles ofwhite wine per month. Next, suppose that the price of red wine goes up to $35 per bottle.In this case, Stanley would consume ______ quantity of bottles of white wine comparedto the original situation.A) 10; 20; smallerB) 20; 10; smallerC) 10; 20; the sameD) 20; 10; the sameE) None of the above.
Total utility O diminished as the quantity of a good increases increases as long as more goods are acquired increases as long as marginal utility increases O increases as long as marginal utility is positive diminishes as consumption of some good rises