3. Danny's preferences for grass seeds and wildflower seeds are modeled using a homothetic utility function U. Can wildflower seeds exhibit Giffen's paradox for Danny?
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- 1 Assume there are two firms in a Hoteling Linear city. One firm is located at zero and the other at one. Assume the following utility equations: U0=v−p−tx+μ, U1=v−pn−t(1−x). Where U0 is utility from buying the good from the firm located at zero, p is the price for the firm at point zero, t is the travel cost and μ is bonus utility because the firm at point zero makes people a little bit happier. U1 is utility from buying the good from the firm at point one and pn is the price. Part a) Find the indifferent consumer6 If someone has an income of 20 and he wants to buy Pepsi and hamburgers. Hamburgers are sold in an unusual way. There is only one supplier and the more hamburgers he buys, the higher the price per unit. So, hamburgers cost is a total of 2h^2 (squared) for hamburgers. Pepsi is sold at a price of $2. 1. In this case, write out the budget constraint of hamburgers and Pepsi. 2. His utility function is u(h,p) = 12h + 4p. Draw his 1) budget line and 2) a few indifference curves on a graph. 3. What is the optimal bundle for him?Let's say that the demand side of the market for Blue Soda is comprised of 3 leading agents/individuals: Anthony, Brad, and Claire. Let P be the price of 1 liter of Blue Soda, and Qd be the quantity demanded of Blue Soda in liters. Here are the key points to the problem: - Anthony buys only one liter of Blue Soda if the price of it falls below his choke price of $10. - Brad's demand for Blue Soda is defined by QdB = 5 - P/2 - Claire buys 2 liters if the price is below $5, 1 liter if the price is between $5 and $10, and nothing if the price is above $10. Using this information, please sketch the individual demands and the market demand by aggregating the three agents/individuals. Label the graph clearly. Please make sure to sketch the individual demands first and then sketch the market demand.
- 4. Two individuals, Amir and Budi, consume two goods, clothes (X) and shoes (Y). The utility functions for the two individuals are given as: Utility function of Amir, UA = 15X0.25Y0.75Utility function of Budi, UB = 25X0.5Y0.5 The current price for clothes (Px) is Rp 100,000 and the current price for shoes (PY) is Rp 150,000 b. Amir is currently consuming 5 units of clothes (X) and 10 units of shoes (Y), whereas Budi is consuming 12 units of clothes (X) and 8 units of shoes (Y). At this current consumption, have Amir and Budi reached the efficient allocation of clothes and shoes? If they have, explain why. If they have not, calculate the optimal allocation and explain.Maximize the utility function U=X0.6 Y0.25 subject to budget constraint 680 = 8X + 5Y Also show that above utility function is homogenous and homothetic.Every month, a family of three spends $2,000 on food (F) and other items (O). The family’s preferences are represented by the utility function U(F,O) = F1/5O4/5. The unit price of food and the unit price of other items are both Suppose the club did NOT charge a membership fee: how much money would the family spend on food? How much food would the family buy? (
- Consider the following problem for Chik Fil A who faces two types of consumers Steve and Harriett. See their valuations for the chicken sandwich, fries, and soda. Given these valuations, should Chik Fil A sell ala carte or bundle?4. Two individuals, Amir and Budi, consume two goods, clothes (X) and shoes (Y). The utility functions for the two individuals are given as: Utility function of Amir, UA = 15X0.25Y0.75Utility function of Budi, UB = 25X0.5Y0.5 The current price for clothes (Px) is Rp 100,000 and the current price for shoes (PY) is Rp 150,000 a. Determine marginal rate of substitution (MRSXY)between clothes (X) and shoes (Y) for Amir and Budi! Please explain. b. Amir is currently consuming 5 units of clothes (X) and 10 units of shoes (Y), whereas Budi is consuming 12 units of clothes (X) and 8 units of shoes (Y). At this current consumption, have Amir and Budi reached the efficient allocation of clothes and shoes? If they have, explain why. If they have not, calculate the optimal allocation and explain. c. Considering the relative price between of clothes and shoes, at the current consumption, have Amir and Budi reached exchange equilibrium? Please explain d. Use the Edgeworth Box to illustrate the…4. Two individuals, Amir and Budi, consume two goods, clothes (X) and shoes (Y). The utility functions for the two individuals are given as: Utility function of Amir, UA = 15X0.25Y0.75Utility function of Budi, UB = 25X0.5Y0.5 The current price for clothes (Px) is Rp 100,000 and the current price for shoes (PY) is Rp 150,000 a. Determine marginal rate of substitution (MRSXY)between clothes (X) and shoes (Y) for Amir and Budi! Please explain. b. Amir is currently consuming 5 units of clothes (X) and 10 units of shoes (Y), whereas Budi is consuming 12 units of clothes (X) and 8 units of shoes (Y). At this current consumption, have Amir and Budi reached the efficient allocation of clothes and shoes? If they have, explain why. If they have not, calculate the optimal allocation and explain. c. Considering the relative price between of clothes and shoes, at the current consumption, have Amir and Budi reached exchange equilibrium? Please explain d. Use the Edgeworth Box to illustrate the…
- Question: Finn is in charge of decorations for an upcoming festival, and he is planning to decorate withclovers (C) and flags (F). Suppose his preferences over decorations can be represented by theutility function: U(C,F) = C3/4 F1/4 **For this problem, assume C and F are infinitely divisible so you don’t need to worry about restricting to whole-number answers. a.) Write Finn’s budget constraint as a function of the prices PC , PF and his budget I. b.) Write Finn’s constrained optimization problem in Lagrangian form and derive the threefirst order conditions.The queen of england has utility function u(x,y) =xy and the queen is endowed with basket (x,y) = (4,10). if the queen gives up 3 units of good y, how many additional units of good x does she needs to keep her utility constant? a. 1.71 b. 1.99 c. 2.11 d. 2.24The graph below shows the utility function of Mr. Ahmer for herbal tea. Given the information below find the level of marginal utility he attained from the third cup of tea. a. 10 b. 50 c. Given information is insufficient to find the answer d. 0