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- Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either call her on the land-line phone for five cents per minute or he can drive to see her, at a round—trip cost of 2 in gasoline money. He has a total of 10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses a handy utilimometer that measures his total utility from personal visits and from phone minutes. Using the values in Table 6.6, figure out the points 011 Jeremys consumption choice budget constraint (it may be helpful to do a sketch) and identify his utility-maximizing point.Who determines how much utility an individual will receive from consuming a good?Praxilla, who lived in ancient Greece, derives utility from reading poems and from eating cucumbers. Praxilla gets 30 units of marginal utility from her first poem 27 units of marginal utility from her second poem 24 units of marginal utility from her third poem, and so on, with marginal utility declining by three units for each additional poem. Praxilla gets six units of marginal utility for each of her next three cucumbers consumed, five units of marginal utility for each of her next three cucumbers consumed, four units of marginal utility for each of the following three cucumbers consumed, and so on, with marginal utility declining by one for every three cucumber consumed. A poem costs three bronze coins hut a cucumber costs only one bronze coin. Praxilla has 18 bronze coins. Sketch Praxillas budget set between poems and cucumbers, placing poems on the vertical axis and cucumbers on the horizontal axis. Start off with the choice of zero poems and 18 cucumbers, and calculate the changes in marginal utility of moving along the budget line to the next choice of one poem and 15 cucumbers. Using this step-by-step process based on marginal utility, create a table and identify Praxillas utility—maximizing choice. Compare the marginal utility of the two goods and the relative prices at the optimal choice to see if the expected relationship holds. Hint: Label the table columns: 1) Choice, 2} Marginal Gain from More Poems, 3) Marginal Loss from Fewer Cucumbers, 4) Overall Gain or Loss, 5) Is the previous choice Optimal? Label the table rows: 1) 0 Poems and 18 Cucumbers, 2) 1 Poem and 15 cucumbers, 3) 2 Poems and 12 cucumbers, 4) 3 Poems and 9 Cucumbers, 5) 4 Poems and 6 cucumbers 6) 5 Poems and 3 Cucumbers, 7) 6 Poems and 0 Cucumbers.
- Would you expect total utility to rise or fall with additional consumption of a good? Why?Take Jeremys total utility information in Exercise 6.1, and use the marginal utility approach to confirm the choice of phone minutes and round trips that maximize Jeremys utility.4.An individual consumes products X and Y and spends $30 per time period. The prices of the two goods are $3 per unit for X and $3 per unit for Y. The consumer in this case has a utility function expressed as: U(X.Y) = 0.5XY How much X should this individual consume, given that he is maximizing the utility? ( A) 4.17 ( B) 5 (C)6 D) 6.25
- 12 Manuel is a consuming his optimal bundle, and is currently willing to give up 5 apples to obtain 1 orange. Jorge is in the same economy and consuming his optimal bundle, but his marginal utility of oranges is twice that of Manuel. How many apples is Jorge willing to give up to obtain 1 orange? Explain BrieflyAssume that Raymond has $ 37.00 to spend on pretzels and beer. The price of pretzels is $3.00 and the price of beer is $5.00. Marginal utilities for each good are given below. Units MU P MU P / P P MU B MU B / P B 1st 18 6 40 8 2nd 15 5 30 6 3rd 12 4 25 5 4th 9 3 20 4 5th 6 2 15 3 6th 3 1 5 1 If Raymond were given an additional $ and he could be pretzels and beer in fractional quantities he would spend that $…Assume that Raymond has $ 37.00 to spend on pretzels and beer. The price of pretzels is $3.00 and the price of beer is $5.00. Marginal utilities for each good are given below. Units MU P MU P / P P MU B MU B / P B 1st 18 6 40 8 2nd 15 5 30 6 3rd 12 4 25 5 4th 9 3 20 4 5th 6 2 15 3 6th 3 1 5 1 If Raymond is maximizing his utility, then
- 4. Adam's income declines, and as a result, he buys more calamansi juice. Is calamansi juice an inferior or a normal good? What happens to Adam's deman curve for calamansi juice?Five consumers have the following marginal utilities of apples and pears: Consumer Marginal Utility of Apples Marginal Utility of Pears Darnell 8 10 Eleanor 7 16 Jacques 6 12 Kyoko 5 9 Musashi 4 8 The price of an apple is $1, and the price of a pear is $2. Which, if any, of these consumers are optimizing over their choice of fruit? Check all that apply. Darnell Eleanor Jacques Kyoko MusashiJane has a budget of $15 to spend at the local scientific store. Her two favorite items are beakers (Product X) which costs $3 and petri dishes (Peroduct Y) which costs $2. In the schedule below you can see the marginal utility for each of her favorite items. Which combination would maximize Jane's utility? X y Quantity MUx Quantity MUy 1 40 1 24 2 28 2 20 3 24 3 16 4 20 4 12 5 1 5 8 a.) 3 beakers & 3 petri dishes b.) 4 beakers & 2 petri dishes c.) 5 beakers & 1 petri dishes
