7. The Phillie Phanatic always eats his ballpark franks in a special way- I foot-long dog together 1 bun, 1 oz. of mustard, and 2 oz. of pickle relish. His utility is a function only of these four items and any extra amounts of a single item without the other constituents is worthless. a. What form does PP's utility function for these four goods have? b. How might we simplify matters by considering PP's utility to be a function of only one good? What is that good? c. Suppose foot-long hot dogs cost $1, buns cost $.50, mustard costs $.05 per oz, and pickle relish costs $.1 5 per oz. How much does the good defined in part b cost? d. If the price of foot-long hot dog increases by 50 percent (to $1.50) what is the percentage increase in the price of the good? How would a 50% increase in the price of the bun affect the price of the good? Why is the answer different from part d? 16a e.

7. The Phillie Phanatic always eats his ballpark franks in a special way- I foot-long dog together 1 bun, 1 oz. of mustard, and 2 oz. of pickle relish. His utility is a function only of these four items and any extra amounts of a single item without the other constituents is worthless. a. What form does PP's utility function for these four goods have? b. How might we simplify matters by considering PP's utility to be a function of only one good? What is that good? c. Suppose foot-long hot dogs cost $1, buns cost $.50, mustard costs $.05 per oz, and pickle relish costs $.1 5 per oz. How much does the good defined in part b cost? d. If the price of foot-long hot dog increases by 50 percent (to $1.50) what is the percentage increase in the price of the good? How would a 50% increase in the price of the bun affect the price of the good? Why is the answer different from part d? 16a e.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.9P

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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 roundâ€”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.
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.
3.5The Phillie Phanatic (PP) always eats his ballpark franks in a special way; he uses a foot-long hot dog together with precisely half a bun, 1 ounce of mustard, and 2 ounces of pickle relish. His utility is a function only of these four items, and any extra amount of a single item without the other constituents is worthless.a. What form does PP’s utility function for these four goods have?b. How might we simplify matters by considering PP’s utility to be a function of only one good? What is that good?c. Suppose foot-long hot dogs cost $1.00 each, buns cost $0.50 each, mustard costs $0.05 per ounce, and pickle relish costs $0.15 per ounce. How much does the good defined in part (b) cost?d. If the price of foot-long hot dogs increases by 50 percent (to $1.50 each), what is the percentage increase in the price of the good?e. How would a 50 percent increase in the price of a bun affect the price of the good? Why is your answer different from part (d)?f. If the government wanted to raise…
Take Jeremy’s 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 Jeremy’s utility. 6.1Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either callher 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 gasolinemoney. He has a total of $10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses ahandy utilimometer that measures his total utility from personal visits and from phone minutes. Using the values inTable 6.6, figure out the points on Jeremy’s consumption choice budget constraint (it may be helpful to do a sketch)and identify his utility-maximizing point.
The Phillie Phanatic always eats his ballpark franks in a special way; he uses a foot-long hot dog togetherwith precisely half a bun, 1 ounce of mustard, and 2 ounces of pickle relish. His utility is a function onlyof these four items and any extra amount of a single item without the other constituents is worthless.a. What form does PP’s utility function for these four goods have?b. How might we simplify matters by considering PP’s utility to be a function of only one good?What is that good?c. Suppose foot-long hot dogs cost $1.00 each, buns cost $0.50 each, mustard costs $0.05 perounce, and pickle relish costs $0.15 per ounce. How much does the good defined in part (b) cost?d. If the price of foot-long hot dogs increases by 50 percent (to $1.50 each), what is thepercentage increase in the price of the good?e. How would a 50 percent increase in the price of a bun affect the price of the good? Why is youranswer different from part (d)?f. If the government wanted to raise $1.00 by taxing…
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The table below shows Martha’s total utility from burgers and pasta. Suppose that the price of a burger is $4, the price of pasta is $8 a dish, and Martha has $24 a week to spend. Quantity of Burger per week Total utility for Burger MU MU/P Quantity of Dishes Pasta per week Total utility for Pasta MU MU/P 0 0 0 0 1 10 1 20 2 18 2 36 3 25 3 48 4 31 4 56 5 36 5 60 6 40 6 62 a- Conclude whether or not we follow the law of diminishing MU. b- What is optimal combination of Burger and Pasta?
Suppose that as a consumer you have $34 per month to spend for munchies, either on pizzas which cost $6 each or on twinkies which cost $4 each. Suppose further that your preferences are given by the following total utility table. 1 2 3 4 5 6 7 TU for Pizza 60 108 138 156 162 166 166 TU for twinkies 44 76 100 120 136 148 152 First, graph the budget constraint with pizzas on the horizontal axis and twinkies on the vertical axis. What are the intercepts and slope of the opportunity cost? Express the budget constraint as an algebraic equation for a line. Next, should you purchase a twinkie first or a pizza first to get the “biggest bang for the buck”? How can you tell? (Hint: use the utility maximizing rule.) What should you purchase? Next, use the utility maximizing rule to identify the consumer equilibrium, that is, what combination of twinkies and pizzas will…
Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either callher 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 gasolinemoney. He has a total of $10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses ahandy utilimometer that measures his total utility from personal visits and from phone minutes. Using the values inTable 6.6, figure out the points on Jeremy’s consumption choice budget constraint (it may be helpful to do a sketch)and identify his utility-maximizing point