Horatio consumes 20 fries and 12 shakes per week. The price of fries is $3 each...

Horatio consumes 20 fries and 12 shakes per week. The price of fries is $3 each and shakes are $5 each.
2.1 What is the amount of income allocated to shakes and fries consumption?
2.2 What is the price ratio (the price of shakes relative to the price of fries)?
2.3 If Horatio maximizes utility, what is the ratio of the marginal utility of shakes to the marginal utility of fries? (Hint: Start with the rule that you know and then use a bit of algebra.)
2.4 If the price of fries falls, will Horatio consume more fries, fewer fries, or the same amount of fries? Explain your answer using the rule of equal marginal utility per dollar, and include a rationale.

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Eliza consumes 12 cappuccinos and 8 apple turnovers per week. The price of a cappuccino is...

Eliza consumes 12 cappuccinos and 8 apple turnovers per week. The price of a cappuccino is $4 each and apple turnovers are $1 each. 2.1 What is the amount of income allocated to cappuccino and apple turnover consumption? 2.2 What is the price ratio (the price of cappuccinos relative to the price of apple turnovers)? 2.3 Explain the meaning of the price ratio you computed. 2.4 If Eliza maximizes utility, what is the ratio of the marginal utility of cappuccinos...

A community hospital in Southeast Ohio consumes 1,000 boxes of bandages per week. The price of...

A community hospital in Southeast Ohio consumes 1,000 boxes of bandages per week. The price of bandages is $35 per box, and the hospital operates 52 weeks per year. The ordering cost is $15, and the cost of holding one box is 15% of the price of the material. The lead time to receive materials is 2 weeks. CERTAIN DEMAND (SET STANDARD DEVIATION TO 0) a) Currently, the hospital orders bandages in lot sizes of 900 boxes for total costs...

A community hospital in Southeast Ohio consumes 1,000 boxes of bandages per week. The price of...

A community hospital in Southeast Ohio consumes 1,000 boxes of bandages per week. The price of bandages is $35 per box, and the hospital operates 52 weeks per year. The ordering cost is $15, and the cost of holding one box is 15% of the price of the material. The lead time to receive materials is 2 weeks. f) If the hospital uses a periodic review system, with the review period (P) equal to 2 weeks and cycle-service level of...

A local pizzeria sells 500 large pepperoni pizzas per week at a price of $20 each....

A local pizzeria sells 500 large pepperoni pizzas per week at a price of $20 each. Suppose the owner of the pizzeria tells you that the price elasticity of demand for his pizza is -2, and he asks you for advice. He wants to know two things. First, how many pizzas will he sell if he cuts his price by 10%? Second, how will his revenue be affected? If he cuts his price by 10%, his sales will increase to...

(3) The US produces about 12 million barrels of oil per day and consumes about 22...

(3) The US produces about 12 million barrels of oil per day and consumes about 22 million barrels per day (mbpd). Global production and consumption are about 100 mbpd. About 0.75 mpbd come from federal land, and about 1.75 mbpd come from federal waters (primarily the Gulf of Mexico). The current oil price is about $50, the elasticity of oil supply is 0.1 and the elasticity of oil demand is -0.2. a. Using these numbers, calculate the long-term effect on...

3. At a price of $20 per tonne, the supply of wheat in Canada is 25...

3. At a price of $20 per tonne, the supply of wheat in Canada is 25 million tonnes and the demand is 30 million tonnes. When the price increases to $25 per tonne, the supply increases to 30 million tonnes and the demand decreases to 20 million tonnes. Assume both the demand and supply curves are linear. 3. At a price of $20 per tonne, the supply of wheat in Canada is 25 million tonnes and the demand is...

Rob consumes two goods, x and y. He has an allowance of $50 per week and...

Rob consumes two goods, x and y. He has an allowance of $50 per week and is not endowed with either of the goods. If the price of good x increases and his substitution and income effects change demand in opposite directions, a. good x must be a Giffen good. b. good x must be an inferior good. c. WARP is violated. d. good x must be a normal good. e. There is not enough information to judge whether good...

Jilai earns $12 per hour for up to 40 hours of work each week. He is...

Jilai earns $12 per hour for up to 40 hours of work each week. He is paid $18 for every hour in excess of 40. Jilai faces a 20 percent tax rate on his labor earnings. Regardless of how much he works, he also receives $200 in tax-free dividends from prior investments each week. There are 110 non-sleeping hours in the week. graph jilai.

The NYPD employs 20 police officers. Each officer works for 5 days per week. The crime...

The NYPD employs 20 police officers. Each officer works for 5 days per week. The crime rate fluctuates with the day of week, so the number of the police officers required each day depends on which day of the week it is: Monday, 11; Tuesday, 12; Wednesday, 14; Thursday, 15; Friday, 14; Saturday, 18; Sunday;8. The Police Station wants to schedule police officers to maximize the number of the officers whose days off are consecutive. Formulate LP and solve the...

The NYPD employs 20 police officers. Each officer works for 5 days per week. The crime...

Subjects