Julie, who has $64, consumes only two goods: whistles (w), which cost $6 each and xylophones (x), hich cost $7 each. Her preferences over these two goods can be represented by the utility function 3w0.75 0.25 (w, x) = a) What is the optimal number of whistles for Julie to consume given this scenario? b) What is the level of utility Julie attains at this level of consumption? c) Suppose now that the price of whistles rises from $6 to $7. What is the magnitude of this price fect on whistles?
Julie, who has $64, consumes only two goods: whistles (w), which cost $6 each and xylophones (x), hich cost $7 each. Her preferences over these two goods can be represented by the utility function 3w0.75 0.25 (w, x) = a) What is the optimal number of whistles for Julie to consume given this scenario? b) What is the level of utility Julie attains at this level of consumption? c) Suppose now that the price of whistles rises from $6 to $7. What is the magnitude of this price fect on whistles?
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 21SQ
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Transcribed Image Text:Julie, who has $64, consumes only two goods: whistles (w), which cost $6 each and xylophones (x),
which cost $7 each. Her preferences over these two goods can be represented by the utility function
u(w, x) = 3w0.75 0.25
a) What is the optimal number of whistles for Julie to consume given this scenario?
b) What is the level of utility Julie attains at this level of consumption?
c) Suppose now that the price of whistles rises from $6 to $7. What is the magnitude of this price
effect on whistles?
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