Question
In: Economics
Consider Phil who is a utility maximizing consumer with preferences between pizza and burgers, both normal goods.
Consider Phil who is a utility maximizing consumer with preferences between pizza and burgers, both normal goods. Phil currently consumes 5 slices of pizza a week at a price of $2.50 a slice. Suppose the price of pizza were to increase to $3.00 a slice, causing Phil’s consumption to fall to 3 slices. Keith Yacucha Econ 103 Fall 2020
Graph Phil’s personal demand curve for pizza, demonstrate how this change in price causes Phil to change his consumption, be sure to fully label and show both income and substitution effects.
Presume that, including Phil, there are 1000 identical consumers in the immediate market for pizza. Graph the market demand for pizza, be sure to fully label the diagram and compute the total quantity of pizza demanded at $2.50 and $3.00.
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
A utility-maximizing consumer who consumes quantity x and y of two goods has a quadratic utility...
A utility-maximizing consumer who consumes quantity x and y of
two goods has a quadratic utility function given by
Ux,y=x+y-0.05x2-0.05y2
subject to
2x+5y=128
Where $128 is the consumer’s budget and the prices of the two
goods are, respectively, 2 and 5. Assuming marginal utilities Ux,
Uy > 0,
a. Find the quantity x and y that maximize the utility function.
b. Using bordered Hessian, check utility for a maximum.
c. What is the maximum utility of the consumer?
A utility-maximizing consumer who consumes quantity x and y of two goods has a quadratic utility...
A utility-maximizing consumer who consumes quantity x and y of
two goods has a quadratic utility function given by
Ux,y=x+y-0.05x2-0.05y2
subject to
2x+5y=128
Where $128 is the consumer’s budget and the prices of the two
goods are, respectively, 2 and 5. Assuming marginal utilities Ux,
Uy > 0,
a. Find the quantity x and y that maximize the utility function.
b. Using bordered Hessian, check utility for a maximum.
c. What is the maximum utility of the consumer?
A utility-maximizing consumer who consumes quantity x and y of two goods has a quadratic utility...
A utility-maximizing consumer who consumes quantity x and y of
two goods has a quadratic utility function given by
Ux,y=x+y-0.05x2-0.05y2
subject to
2x+5y=128
Where $128 is the consumer’s budget and the prices of the two
goods are, respectively, 2 and 5. Assuming marginal utilities Ux,
Uy > 0,
a. Find the quantity x and y that maximize the utility function.
b. Using bordered Hessian, check utility for a maximum.
c. What is the maximum utility of the consumer?
A utility-maximizing consumer who consumes quantity x and y of two goods has a quadratic utility...
A utility-maximizing consumer who consumes quantity x and y of
two goods has a quadratic utility function given by
Ux,y=x+y-0.05x2-0.05y2
subject to
2x+5y=128
Where $128 is the consumer’s budget and the prices of the two
goods are, respectively, 2 and 5. Assuming marginal utilities Ux,
Uy > 0,
a. Find the quantity x and y that maximize the utility function.
b. Using bordered Hessian, check utility for a maximum.
c. What is the maximum utility of the consumer?
Consider the utility function of a consumer who obtains utility from consuming only two goods, ?1...
Consider the utility function of a consumer who obtains utility
from consuming only two goods, ?1 and ?2 , in fixed proportions.
Specifically, the utility of the consumer requires the consumption
of two units of ?2 for each unit of ?1.
i. Report the mathematical expression of the utility function of
the consumer.
ii. Provide a diagram of the corresponding indifference
curves.
iii. Provide at least one example and economic intuition.
Suppose that the consumer has available income equal to...
Consider the utility function of a consumer who obtains utility from consuming only two goods, ?1...
Consider the utility function of a consumer who obtains utility
from consuming only two goods, ?1 and ?2 , in fixed proportions.
Specifically, the utility of the consumer requires the consumption
of two units of ?2 for each unit of ?1. A.
i. Report the mathematical expression of the utility function of
the consumer.
ii. Provide a diagram of the corresponding indifference
curves.
iii. Provide at least one example and economic intuition.
Suppose that the consumer has available income equal...
4. Provide an example of utility function that describes the preferences of a consumer who consumes...
4. Provide an example of utility function that describes
the preferences of a consumer who consumes only two goods and
considers these two goods to be non-perfect substitutes. Explain
also the meaning of variables and coefficients in the utility
function.
5. Provide an example of utility function that describes
the preferences of a consumer who consumes only two goods and
considers these two goods to be perfect complements. Explain also
the meaning of variables and coefficients in the utility
function....
Consider a consumer maximizing his preferences over a budget set (which is defined by a weak...
Consider a consumer maximizing his preferences over a budget set
(which is defined by a weak inequality involving prices and
income). Which of the following assumptions on preferences
guarantees that a bundle lying in the interior of the budget set is
not a maximizer?
(A) Transitivity (B) Convexity (C) Continuity (D) Monotonicity
(E) Homotheticity
Consider a consumer who derives utility from three consumption goods: x and y and z, which...
Consider a consumer who derives utility from three consumption
goods: x and y and z, which prices are given, respectively, by px ,
py and pz . We
let z denote the numeraire good and normalize its prices to
unity. The consumer possesses an initial endowment of Z>0 units
of z.
The utility function of the consumer is given by:
(1) U(x,y,z)=v(x)+u(y⋅py)+z.
Thus, the consumer is deriving utility from the amount she
spends on y and not from the number...
Consider a consumer's preferences over consuming two goods that are represented by the following utility function:...
Consider a consumer's preferences over consuming two goods that
are represented by the following utility function:
U（x1，x2）= x1^a
x2^1-α
0 < α < 1
x1，x2 ≥ 0
(a) Do her preferences satisfy monotonicity? (4 mark)
(b) Do her preferences exhibit diminishing marginal utility?
(c) Are her preferences convex? In other words, do her
preferences exhibit diminishing marginal rate of substitution?
(Hint: Find MRS and its rate of changes with respect to the good on
the horizontal axis.)
(d) Use a...
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