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 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 S. S= 2C
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- Suppose U = 2X + Y, I = 20, Px = 2, and Py = 2. (a) Find Marshallian demand for X and Y . (b) What is Marshallian demand for X and Y if the price of X increases to 5? How much of the change in demand for X is the income effect and how much is the substitution effect? (c) How much is compensating variation for the price change described in part (b)? (d) How much is equivalent variation for the price change described in part (b)? ( Please solve all the subparts ASAP I will give you thumbs up . )2. Pam is rich and at this high income level, her demand for good X is independent of income and given by X*=37.2- 3 px/py where px and py denote respectively the price of good X and the price of good Y. Assuming the price of good Y is equal to 1, find Pam's compensating variation if the price of good X rises from 2 to 3.4 dollars.Suppose X and Y are substitutes. If the price of Y increases, the demand for X will most likely _______, and the quantity demanded of X will also _______. 1) increase, increase 2) increase, decrease 3) decrease, increase 4) decrease, decrease 5) None of the above. Q19 Suppose X is a normal good. If the income increases, the demand for X will ______. 1) increase 2) decrease 3) stay the same
- Q2 The demand for good X is given by Qx d = 6,000 − 1/2 Px − Py + 9 Pz + 1/10 M Research shows that the prices of related goods are given by Py = $6,500 and Pz = $100, while the average income of individuals consuming this product is M = $80,000. and Px = $5,230? Find own price elasticity, cross price, and income elasticity. Indicate whether goods Y and Z are substitutes or complements for good X. Good x is an inferior or normal good?1. Suppose David spends his income (I) on two goods, x and y, whose market prices are px and py, respectively. His preferences are represented by the utility function u(x, y) = lnx + 2lny (MUx = 1/x, MUy = 2/y). a. Derive his demand functions for x and y. Are they homogeneous in income and prices? b. Assuming I = $60 and px = $1, graph his demand curve for y. c. Repeat part (b) for the case in which px = $2Q.3. Suppose that Salim income is OMR 3000. His demand for good X and good Y depends upon the prices for these two goods, if the price of one unit of (good X) is OR 50 and the price of one unit of (good Y) is OR 60. If Ali income increase to 4200 will this affect Salim satisfaction level. Discuss a) Draw the budget line for Salim b) Find the slope of this budget line.
- The Utility Function is U(q1, q2) = q11/6 . q21/3 a.) Solve for the amount of good #1 the individual would demand if good #1 and good #2 both have a price of $1 (p1= p2 =1) and the individual has an income of $9 ( Y = 9). b.) If the individual's income increased by 1%, what would be the resulting percentage change in their quantity demanded of good #1?No written by hand solution Kuanysh’s preferences over two goods are given by utility function u(x1, x2) = x1(x2)^3, and the prices of good 1 and good 2 are given by p1 and p2. Let m denote Kuanysh’s income. Find Kuahysh’s price offer curve for the price of good 1. Fix Kuanysh’s income at m = 60 and the price of good 2 at p2 = 3 and let the price of good 1 change from p1 = 3 to p ′ 1 = 5. Moving from p1 = 3 to p ′ 1 = 5, consider the Slutsky variant of the Slutsky equation: (a) What is the intermediate amount of money m′ ? (b) What is the Slutsky substitution effect? (c) What is the income effect? Moving from p1 = 3 to p ′ 1 = 5, consider the Hicks variant of the Slutsky equation: (a) What are the levels of utility in the two cases? (b) What is the intermediate amount of money m′ ? (c) What is the Hicks substitution effect? (d) What is the income effect?The demand for good X is given by Qd = 6,000 – 1/2 Px – Py + 9Pz + 1/10 M Research shows that the prices of related goods are given by Py = $6,500 and Pz = $100 while the average income of individuals consuming this product is M = $70,000. A. Indicate whether goods Y and Z are substitutes or complements for good X. B. Is X an inferior or a normal good? C. How many units of goods X will be purchased when Px = $5,230? D. Determine the demand function and the inverse demand function for good X. Graph the demand curve for good X.
- Jane has the utility function U(x,y) = x(y+3). The price of x is 2₺ and the price of y is 1₺. Income is 15₺. a) How much x does Jane demand? How much y? b) If his income doubes and prices stay unchanged, will Jane's demand for both goods double? c) The prices change, so that x now costs 1 and y now costs 4. What is the new ordinary demand?Assume the demand for cherries is elastic and that the producer of cherries increases the price of cherries. As a result? A convex indifference curve implies what type of behavior? If a consumer always wishes to consume peanut butter and jam in fixed proportions, he treats these two goods as if they are? Assume PX= $3 and PY = $6 and income = $30. What is the relative price of an additional unit of good X in terms of the amount of good Y that has to be given up? Assume there are only two goods (X and Y). Assume the relative price of good X, is 2 of good Y. If income doubles, the price of X doubles and the price of Y doubles, what will be the relative price of good Y?Sara’s demand function for good x is x(px,py,m) = m , where px is the 2px price of good x, py is the price of good y, and m is the income level. Is x a normal good at px = 1 and m = 24? Explore this by taking derivative of demand function with respect to m. Is x an ordinary good at px = 1 and m = 24? Explore this by taking derivative of demand function with respect to px.