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16. Benji runs a coffee house. His customers love pumpkin spiced lattes, but will only drink them if they are produced using a specific ratio of spiced coffee and sweet whipped cream. To produce one latte, q, the firm needs to use 0.25 cup of spiced coffee, S, and 0.5 cup of cream, C. The price of l cup of spiced coffee is Ps = 1, and the price of I cup of cream is pc = 1. The firm will produce pumpkin spiced lattes using the cost-minimizing combination of coffee and cream. Which of the following equations describes the optimal mix of spiced coffee and cream? a. S=C b. S=0.25C c. S= 4C d. S=0.5C e. S= 2C

16. Benji runs a coffee house. His customers love pumpkin spiced lattes, but will only drink them if they are produced using a specific ratio of spiced coffee and sweet whipped cream. To produce one latte, q, the firm needs to use 0.25 cup of spiced coffee, S, and 0.5 cup of cream, C. The price of l cup of spiced coffee is Ps = 1, and the price of I cup of cream is pc = 1. The firm will produce pumpkin spiced lattes using the cost-minimizing combination of coffee and cream. Which of the following equations describes the optimal mix of spiced coffee and cream? a. S=C b. S=0.25C c. S= 4C d. S=0.5C e. S= 2C

Microeconomic Theory
Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter6: Demand Relationships Among Goods
Section: Chapter Questions
Problem 6.8P
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Can you help me with 16 and 17 please! I believe 16 is e and 17 is e but I am not sure which is why I need help. Thank u!! 

14. Let pi and p2 be the prices of good 1 and good 2, respectively, and let I be income. Which of the following is true of the following demand curve: q, = 60 – 3p: – 2p2 + 21? a. good 1 is inferior, and good 1 and 2 are substitutes. b. good 1 is inferior, and good 1 and 2 are complements. c. good 1 is normal, and good 1 and 2 are substitutes. d. good 1 is normal, and good 1 and 2 are complements. e. good 1 is normal, and good 1 and 2 are independent. 15. A perfectly competitive market has the following demand and supply: QD = 90 – 5p QS = 5p Suppose the government introduces a $4 subsidy on each unit sold. The total subsidy cost for the government will be a. $110 b. $140 c. $220 d. $330 e. $605 16. Benji runs a coffee house. His customers love pumpkin spiced lattes, but will only drink them if they are produced using a specific ratio of spiced coffee and sweet whipped cream. To produce one latte, q, the firm needs to use 0.25 cup of spiced coffee, S, and 0.5 cup of cream, C. The price of 1 cup of spiced coffee is Ps = 1, and the price of 1 cup of cream is pc = 1. The firm will produce pumpkin spiced lattes using the cost-minimizing combination of coffee and cream. Which of the following equations describes the optimal mix of spiced coffee and cream? a. S=C b. S=0.25C c. S= 4C d. S=0.5C e. S= 2C 17. Ted Lasso spends all his on chips and pints. He has a Cobb-Douglas utility function with strictly convex indifference curves. The graph below illustrates his budget constraint. Which of the following consumption bundles could he choose in order to maximize his utility? а. А Pints b. В 10 с. С d. D e. It is not possible to determine without more information. 30 Chips
Transcribed Image Text:14. Let pi and p2 be the prices of good 1 and good 2, respectively, and let I be income. Which of the following is true of the following demand curve: q, = 60 – 3p: – 2p2 + 21? a. good 1 is inferior, and good 1 and 2 are substitutes. b. good 1 is inferior, and good 1 and 2 are complements. c. good 1 is normal, and good 1 and 2 are substitutes. d. good 1 is normal, and good 1 and 2 are complements. e. good 1 is normal, and good 1 and 2 are independent. 15. A perfectly competitive market has the following demand and supply: QD = 90 – 5p QS = 5p Suppose the government introduces a $4 subsidy on each unit sold. The total subsidy cost for the government will be a. $110 b. $140 c. $220 d. $330 e. $605 16. Benji runs a coffee house. His customers love pumpkin spiced lattes, but will only drink them if they are produced using a specific ratio of spiced coffee and sweet whipped cream. To produce one latte, q, the firm needs to use 0.25 cup of spiced coffee, S, and 0.5 cup of cream, C. The price of 1 cup of spiced coffee is Ps = 1, and the price of 1 cup of cream is pc = 1. The firm will produce pumpkin spiced lattes using the cost-minimizing combination of coffee and cream. Which of the following equations describes the optimal mix of spiced coffee and cream? a. S=C b. S=0.25C c. S= 4C d. S=0.5C e. S= 2C 17. Ted Lasso spends all his on chips and pints. He has a Cobb-Douglas utility function with strictly convex indifference curves. The graph below illustrates his budget constraint. Which of the following consumption bundles could he choose in order to maximize his utility? а. А Pints b. В 10 с. С d. D e. It is not possible to determine without more information. 30 Chips
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