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Martha spends 5 hours of free time exercising and playing music per day.  The table below represents the level of utility she receives from the various combinations of exercise and music activities.  For instance, if she only plays music, her total utility from exercise will be 0, and the utility from music will be 50.  If she exercises for 1 hour, she will receive a level of utility of 25. Utility is measured in ‘utils’; those numbers are arbitrary and designed to quantify the benefits received from various actions. Utility for Exercise Utility from Music 0 utils from 0 hours of exercise 50 utils from 5 hours of music 25 utils for 1 hours of exercise 45 utils from 4 hours of music 40 35 45 20 50 0 Marginal analysis will help Martha in her decision making regarding how to spend her free time because ... All answers are correct.   She will realize which activity is more important to her.   She will be able to find the combination of music and exercise which gives…

Case No. 1 Emma likes to call her friend regularly during the month, but he lives abroad. A call costs him $5/minute. The psychological benefit (measured in dollars) of the first 100 minutes of call is $10/minute, that of the next 100 minutes, $5/minute, that of the next 100 minutes, $2.5/minute and finally, that of the next 100 minutes, also $2.5/minute. A) If Emma calls her friend 100 minutes a month, does she make a net gain? B) What is the number of call minutes per month that maximizes Emma's satisfaction? C) If we use Emma's monetary measure of satisfaction, what is the amount of her satisfaction? D) What should be the price per minute of a call for Emma to be at the maximum satisfaction by choosing to call 400 minutes per month?

2) Explain how utility could be used in a decision where performance is not measuredby monetary value.

An individual has the following utility function: U = Z!/2 H/2, where Z is a composite good and H is the level of health. The individual has income, m = $100. The price of the composite good, Z, is Pz = 1. The price of health, H, is PH = 4. What is the optimal consumption bundle of H and Z that maximizes utility? Show your steps and show the decision graphically (which includes finding the endpoints of the budget constraint).

Suppose there is a new preventative treatment for a common disease. If you take the preventative treatment, it reduces the average amount of time you spend sick by 10%. The optimal combination of Z (home goods) and H (health goods) _____. Suppose there is a new preventative treatment for a common disease. If you take the preventative treatment, it reduces the average amount of time you spend sick by 10%. The optimal combination of Z (home goods) and H (health goods) _____. a. both may decrease b. H may increase; Z may not change c. both may increase or one may stay the same while the other increases. d. Z may increase; H may decrease e. both may increase

5 every day examples of interpersonal utility comparison.

Question #3

Number 4 please

Xavier has preferences between food eaten today and food eaten tomorrow of the form. U(today, tomorrow) = 0.51 * ln(today) + 0.49 * ln(tomorrow) He has $100,000 to spend. Food today costs $20 per pound; food tomorrow costs $19 per pound. 9. How many pounds of food does he consume today? 10. How many pounds of food does he consume tomorrow? (Please evaluate to get number values as solution)

True or false.  Maximizing choices occur when combinations of two goods are made such that they are affordable and achieve the highest indifference curve (i.e. the highest utility).

Utility equals satisfaction true or false

Problem 2: Brian wants to use his recent knowledge of utility to develop his own utility function for how many hours he should study for future tests. He mainly cares about two attributes: the number of hours he studies (x), and the mark (out of 100) that he gets (y). His research of utility functions shows that when a decision maker has to decide based on more than one attribute, a multi-linear multi-attribute utility function can be developed. This function follows the form U(x, y) = kxUx(x) + kyUy(y) + (1 − kx-ky)Ux(x)Uy(y), where Ux(x) and Uy(y), are independent utility functions for attribute x and attribute y, and kx and ky are constants. If Brian just considers the number of hours he studies, he believes his utility function for the number of hours he studies is: Ux(x) : = 1 x² - where 0 ≤ x ≤ 4. If Brian just considers the 16 = mark he gets, his utility function is: Uy(y) : ) y , where 0 ≤ y ≤ 100. Brian is indifferent J 100 between (i) studying 0 hours and getting a mark of 49…

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?

You have eaten two bowls of ice cream at Sundae School Ice Cream store. You consider eating a third. As a rational consumer you should make your choice by comparing   Question 13 options:   A)  the benefits from eating all three bowls of ice cream to how much three bowls of ice cream costs.   B)  the benefits from eating all three bowls of ice cream to how much one more bowl of ice cream costs.   C)  the benefits from eating one more bowl of ice cream to how much three bowls of ice cream costs.   D)  the benefits from eating one more bowl of ice cream to how much one more bowl of ice cream costs

No hand written solution Please draw both graphs   Consider a consumer spending their available income on two goods: medicines and food. Draw a graph showing the consumer maximizing utility given their income. Clearly label the graph. Show what happens to the utility maximizing solution if the price of medicine increases. Draw another graph showing what happens if income increases.

You are maxiimizing utility when :A)(MU of X)/(P of X) < (MU of Y)/(P of Y). B)(MU of X)/(P of X) > (MU of Y)/(P of Y).  C)(MU of X)/(P of X) = (MU of Y)/(P of Y). D)(MU of X)/(P of Y) = (MU of Y)/(P of X).

The government wants to make medicare benefits available to more people, but to achieve this goal, it needs to make cuts in the existing medicare budget. The two areas where they are considering cuts are non-essential elective surgery and 6-12 month mental health care programs. Applying the concept of diminishing marginal utility, the budget cuts should be made for spending on: a. neither can be compared by measuring marginal utility. b. mental health therapy due to its higher marginal return rate. c. elective surgery due to its lower marginal return rate. d. both programs, which have the same marginal return rate.

learn-eu-central-1-prod-fleet01-xythos.content.blackboardcdn.com Imagine there is an outbreak of 'mad sheep' disease, which wipes out a considerable portion of the sheep population in Scotland. This results in a shortage of Haggis and an increase in its price. a) Show the effect of this price increase on Angus' budget line and optimal choice, and explain the forces underpinning this outcome. (Hint: Consider substitution and income effects). b) Assuming that Haggis' price continues to increase over the subsequent months, derive the demand curve for Haggis. c) Discuss the income and substitution effects within the context of this price increase assuming that Haggis is an inferior good. 2 26% 1

A consumer has a choice of spending $20,000 on a Honda or $14,000 on a Kia. She was observed buying a Kia during the weekend. Does this mean the consumer prefers the Kia to the Honda?

Distinguish between cardinal and ordinal utility