Please refer to the following information to answer the question (in bold) below: • You have $300 allocated for spending on a composite good (Y) and car washes (CW). • The price of the composite good is normalized at $1 (Py = $1). • There are two options for purchasing car washes for your car. o Option 1: Pay per car wash, at $20/wash (Pcw = $20). o Option 2: Buy a 10-car wash value pack for $150. Any additional car wash, beyond the included 10 washes, costs you $20/car wash. Let's say you are setting up your budget constraint under the assumption that you purchase the 10 car wash value pack. Which of the following expressions represents the piece of the budget constraint when CW - 10. OY 100-20CW OY= 150-20CW Y 350 20CW OY 500-20CW

Please refer to the following information to answer the question (in bold) below: • You have $300 allocated for spending on a composite good (Y) and car washes (CW). • The price of the composite good is normalized at $1 (Py = $1). • There are two options for purchasing car washes for your car. o Option 1: Pay per car wash, at $20/wash (Pcw = $20). o Option 2: Buy a 10-car wash value pack for $150. Any additional car wash, beyond the included 10 washes, costs you $20/car wash. Let's say you are setting up your budget constraint under the assumption that you purchase the 10 car wash value pack. Which of the following expressions represents the piece of the budget constraint when CW - 10. OY 100-20CW OY= 150-20CW Y 350 20CW OY 500-20CW

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Q1. Assume you are given $20 a week to spend only on your favorite choices of drinks. You have two favorite drinks: Di costs $2 and D2 costs $4. Your utility from the purchase of your drinks is U(D₁) and U(D2). The values of utilities are given below - D₁ 0 1 2 3 4 5 U(D₁) 0 12 20 26 30 32 D₂ 0 1 3 U(D₂) 0 2 3 32 5 20 40 444 46 X is the number of D1 and Y is the number of D2 you purchase in a week. a) What combination of X and Y would make you a utility maximizer? b) If you are not maximizing your utility, how should you reallocate your allowance? Explain.
A consumer finds only three products, X, Y, and Z, are for sale. The amount of utility yielded by their consumption is shown in the table below. Assume that the prices of X, Y, and Z are $10, $2, and $8, respectively, and that the consumer has an income of $74 to spend. (a) Complete the following table by computing the marginal utility per dollar for successive units of X, Y, and Z to one or two decimal places. (b) How many units of X, Y, and Z will the consumer buy when maximizing utility and spending all income? Show this result using the utility maximization formula. (c) Why would the consumer not be maximizing utility by purchasing 2 units of X, 4 units of Y, and 1 unit of Z? Product X Product Y Quantity Utility Marginal Quantity Utility Marginal Utility Utility per$ per$ 1 23 4567 42 82 118 148 170 182 182 1 23 4 5 6 7 14 26 36 44 50 54 56.4 Product Z Quantity Utility Marginal Utility per$ 1 23456 7 32 60 84 100 110 116 120 3..
Refer to the graph below Quantity of Y 160 0 Multiple Choice The consumer's income is $1,000 Why doesn't the consumer choose the combination at point B O Quantity of X 200 O The marginal utility of Y exceeds the marginal uplity of X O The consumer is willing to give up more X for an additional unit of Y than must be given up given the relative prices of X and Y. The marginal utility per dollar spent on X exceeds the marginal utility per dollar spent on Y The consumer is willing to give up more Y for an additional unt of X than must be given up given the relative prices of X and Y
Suppose Jimi has reference dependent preferences over guitars and money as in Tversky and Kahneman (1991). His utility functions are given below. Gains Gains 400 -2 -2 2 Guitars 2$ Losses Losses i-600 -2 What is the least amount of money Jimi is willing to accept to sell one of his guitars? (just enter a dollar amount, i.e., "10o0", not "$1000"
Stan Moneymaker needs 15 gallons of gasoline to top off his automobile’s gas tank. If he drives an extra eight miles (round trip) to a gas station on the outskirts of town, Stan can save $0.10 per gallon on the price of gasoline. Suppose gasoline costs $3.90 per gallon and Stan’s car gets 25 mpg for in-town driving. Should Stan make the trip to get less expensive gasoline? Each mile that Stan drives creates one pound of carbon dioxide. Each pound of CO2 has a cost impact of $0.02 on the environment. What other factors (cost and otherwise) should Stan consider in his decision making?
You are choosing between two goods, X and Y, and your marginal utility from each is as shown in the table below. If your income is $9 and the prices of X and Y are $2 and $1, respectively, what quantities of each will you purchase to maximize utility? What total utility will you realize? Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase? Using the two prices and quantities for X, derive a demand schedule (price–quantity-demanded table) for X.
Answer the following questions using the following information. Columns 1 and 2 in the table below show the marginal utility that Cody gets by purchasing products A and B. Column 3 shows the marginal utility Cody gets from saving Assume that the price of A is $13 the price of B is $10, and Cody has an income of $129. a) Find the following series of MU/$ for each column. Note: Keep as much precision as possible during your calculations. Your final answer should be accurate to at least two decimal places Column 1 Column 2 Column 3 Units of A MU MU/S Units of B MU MU/$ Number of $ saved MU MU/S 68 6.8 1 80 6.15 1. 13 0. 2 71 5.46 2 63 6.3 2 10 0. 3 66 5.08 3 56 5.6 3 7 4 61 4.69 4. 46 46 0. 54 4.15 40 4 45 3.46 31 3.1 6. 1 39 3 22 2.2 0. 29 2.23 8 17 1.7 8 b) What quantities of A and B will Cody purchase in maximizing his utility? Quantity of A: 0 Quantity of B: 0 c) How many dollars will Cody save? Dollars Saved = $0 SAVE AND CLOSE
Columns 1 through 4 of the accompanying table show the marginal utility, measured in utils, that Ricardo would get by purchasing various amounts of products A, B, C, and D. Column 5 shows the marginal utility Ricardo gets from saving. Assume that the prices of A, B, C, and D are $18, $6, $4, and $24, respectively, and that Ricardo has an income of $105. Column 1 Column 2 Column 3 Column 4 Units Units Units Units of A MU of B MU of C MU of D MU 1 72 1 24 1 15 1 36 54 15 12 2 30 3 45 3 12 3 8. 3 24 4 36 4 7 4 18 27 7 5 5 13 6 18 6 5 6 4 6 7 7 15 7 2 7 3.5 7 8 12 8 1 8 3 8 2 а. What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility? b. How many dollars will Ricardo choose to save? c. Check your answers by substituting them into the algebraic statement of the utility-maximizing rule. In other words, show it works when using this rule.
Max is very peculiar about his morning coffee routine. He likes to use exactly two spoons of coffee for every six ounces of water. This give him the following utility function: U = min(2Water, 6Cof fee), where Water (W) is measured in fluid ounces and Coffee (C) in spoons. (a) afford while utility-maximizing? How many spoons of coffee does he use in doing so? (b) If he spends exactly $2 on coffee every morning, how many 8 ounce cups of coffee can he How much utility does Max get from his morning cup/s of coffee?
3) Marco has $100 worth of grain in period 1 but gets no grain in period 2. Marco has two choices. He can store the grain that he does not consume in period 1. This results in a loss of 20% of the grain due to pests. Assume that with this option he will choose to consume 68 units of grain in period 1 and 26 units in period 2. Instead, Marco can sell the grain he does not consume in period 1 and lend the money from that sale to someone today at an interest rate of 10%. He can then use the repayment of that loan to buy gain in period 2. a) Based on this information, draw a diagram that outlines Marco's choices. Is he definitely better off once the opportunity to lend is available to him? b) Relative to his initial equilibrium point, does he unambiguously consume more in both periods once he can lend out the excess he does not consume in period 1? c) Now assume that Marco can sell any excess grain he doesn't consume in period 1 and invest the money he gets in a new type of risky activity.…
Suppose that Omar’s marginal utility for cups of coffee is constant at 5.5 utils per cup no matter how many cups he drinks. On the other hand, his marginal utility per doughnut is 11 for the first doughnut he eats, 10 for the second he eats, 9 for the third he eats, and so on (that is, declining by 1 util per additional doughnut). In addition, suppose that coffee costs $1 per cup, doughnuts cost $1 each, and Omar has a budget that he can spend only on doughnuts, coffee, or both. How big would that budget have to be before he would spend a dollar buying a first cup of coffee?
The daily total utility per quantity of consumption is shown in the figure. This shows that the total utility of consuming 1 product is $1.60, the total utility of 2 products is $3.00, and so on. Using marginal analysis, for which market price (per unit) is the optimal daily quantity of consumption 4 units? Quantity (units) 1 2 3 4 5 Total utility $1.60 $3 $4.20 $5.20 $6.00 a) $5.10 b) $0.90 c) $1.10 d) $1.30 e) $5.30