v) Illustrate your answer to (iii) on a graph, include your indifference curve, the budget constraint, the slope of the budget constraint, and all labels.
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CAN YOU ANSWER PART 4 (iv) PLEASE???
Suppose you have preferences for pizza (z) and soda (d). The price of pizza, pz = 5.00 and the price of soda,
pd = 2.00. You have an income of I = 20 that you can spend on pizza and soda every week.
Suppose you like to always consume 3 pieces of pizzas with 2 cups of soda.
•(i) What type of preference do you have for pizzas and sodas?
•(ii) Derive the utility function for pizza and sodas
•(iii) Solve for your optimal consumption of pizza and sodas
•(iv) Illustrate your answer to (iii) on a graph, include your indifference curve, the budget constraint,
the slope of the budget constraint, and all labels.
Step by step
Solved in 4 steps with 1 images
- Suppose you have preferences for pizza (z) and soda (d). The price of pizza, pz = 5.00 and the price of soda,pd = 2.00. You have an income of I = 20 that you can spend on pizza and soda every week. Suppose you are equally happy consuming either 3 pieces of pizzas or 2 cups of soda.•(i) What type of preference do you have for pizzas and sodas?•(ii) Derive the utility function for pizza and sodas•(iii) Solve for your optimal consumption of pizza and sodas•(iv) Illustrate your answer to (iii) on a graph, include your indifference curve, the budget constraint,the slope of the budget constraint, and all labels.CAN YOU ANSWER PART 4 (iv) PLEASE?? Suppose you have preferences for pizza (z) and soda (d). The price of pizza, pz = 5.00 and the price of soda,pd = 2.00. You have an income of I = 20 that you can spend on pizza and soda every week. Suppose you are equally happy consuming either 3 pieces of pizzas or 2 cups of soda.•(i) What type of preference do you have for pizzas and sodas?•(ii) Derive the utility function for pizza and sodas•(iii) Solve for your optimal consumption of pizza and sodas•(iv) Illustrate your answer to (iii) on a graph, include your indifference curve, the budget constraint,the slope of the budget constraint, and all labels.Suppose you have preferences for pizza (z) and soda (d). The price of pizza, pz = 5.00 and the price of soda,pd = 2.00. You have an income of I = 20 that you can spend on pizza and soda every week.Suppose you like to always consume 3 pieces of pizzas with 2 cups of soda.•(i) What type of preference do you have for pizzas and sodas?•(ii) Derive the utility function for pizza and sodas•(iii) Solve for your optimal consumption of pizza and sodas•(iv) Illustrate your answer to (iii) on a graph, include your indifference curve, the budget constraint,the slope of the budget constraint, and all labels.
- 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.2. Maria likes to have one cup of coffee (x) and two slices of bread (y) each morning. Which of the following utility functions represents Maria's preference for (x, y)? (a) U(x, y) = min(8x, 2y) (b) U(x, y) = min (4x, 2y) - RIGHT ANSWER (c) U(x, y) = min(x, 2y) (d) U(x, y) = min(x, 2y)4. Liam initially has a weekly allowance of €24 to spend on eggs (at €0.40 per egg) and beans (at €0.80 per tin). Liam will only consume 4 eggs with each tin of beans and never changes this proportion. (a) What is the utility maximising amount of eggs and beans that Liam buys each week? (b) Suppose the price of eggs rise to €0.60 per egg but the price of beans falls to €0.60 per tin. At the same time, Liam's weekly allowance rises to €30. How much of each good will Liam now buy? Compare your answer to that in (a) and explain the difference, if there is one. Use a diagram to complement your answer.
- EXERCISE 7 Aisha is considering how to allocate the next 6 hours of her free time. She could choose between leisure (L) and helping her neighbour with the house chores. If she decides to help her neighbour, she is going to get paid at £25 per hour, which she can then spend on her favourite pizza (P). Suppose the price of pizza is £12.50. Aisha's preferences for leisure and pizza are given by the following utility function: U(L, P) = 3L + P. (MU₁ = 3, MUp = 1). a) Write down Aisha's budget equation and draw the corresponding budget line. Clearly label the axes and calculate the coordinates of the points of intersection of the budget line with each axis. b) Calculate Aisha's marginal rate of substitution between leisure and pizza. Explain the concept of MRS and interpret the figure obtained. c) Find Aisha's optimal consumption bundle, both algebraically and graphically. Explain your reasoning. d) Would Aisha's optimal choice change if she could get a discount on her pizza purchases so…EXERCISE 6 If Ginna spends her entire budget, she could buy a chosen set of groceries and also buy 10 notebooks. If she spends only half of her budget, she could only buy a set of groceries and could not afford any notebooks. Suppose Ginna's budget is £150. Her preferences for groceries (G) and notebooks (N) can be described by the following utility function: U(G, N) = 30G + 2N (MUG = 30, MUN = 2). a) Find Ginna's optimal consumption bundle. Provide both algebraic and graphical solution. Explain your reasoning. b) Discuss how the price of a notebook should change for Ginna to change her optimal consumption choice. c) If the price of a notebook increases by 50%, how should the price of the groceries drop so that Ginna can be as well off as before this change in prices? d) Discuss the implications of the price change from c) on Ginna's optimal choice. In your discussion, include the analysis of the substitution and income effects as well as Ginna's demand for groceries and/or notebooks.How can one's choice of purchases/consumption be infuenced by utility or marginal utility?
- 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?4 Part Question on Caesar * * PART 1 * * Caesar has preferences that are described by the utility function u = 3x 1 + 5x 2. Caesar strictly prefers the bundle (x 1, x 2) = (0, 6.6) to the bundle A. (3, 3) B. (5, 3.6) C. (0, 8.4) D. (11, 1.8) E. (8, 3.60) * * PART 2 * * What is the functional form of Caesar’s preferences, or indifference curves? A. Linear (perfect substitutes) B. Leontief (perfect complements) C. Satiation D. Concave, but not strictly concave E. Cobb-Douglas * * PART 3 * * Caesar’s preferences are A. strictly convex. B. definitely not well-behaved. C. definitely well-behaved. D. strictly concave. E. neutral. * * PART 4 * * Caesar has been consuming the bundle (x 1, x 2) = (10, 2.4). At this point, what is the marginal rate of substitution? A. – 0.25 B. –0.6 C. – 1.67 D. – 3.0 E. – 5.0.Question Four Assume a household with a monthly income of $5,000. This household allocates its income to the purchasing of food and nonfood products. If the average price of food products is $20 per unit and nonfood items cost $150 per unit (a) Write the household's budget equation. (b) If this household consumes 100 units of food products, how many units of nonfood items can it buy? (c) Assume that the price of nonfood products increases to $160. Write the new budget equation. (d) If this household wants to purchase food and nonfood items in the same proportion as in part (b), what is the household's new bundle in part (c)? (e) Assume the household's income increases by 5%. Repeat parts (a) to (d) (f) Assume that due to competition prices of food and nonfood products in decline by 5% while the household's income remains the same. Repeat parts (a) and (b) and Compare your results with part (e). CAMON 11 AI 16M AI Clear Selfie