A rational consumer has a utility function that follows all of the characteristics explained in class and can choose to buy either “medical care” or sushi. S/he is constrained by a weekly budget 400. Medical care costs $20 per unit and sushi $6. Graphically and verbally detail the following using proper terms, labels, and vocabulary. Utility Function=6x^1/3y^2/3 a. Draw this consumer’s utility function and budget constraint. Indicate the optimal bundle & briefly explain why. b. Consumer’s income decreases to $280 per week. c. A moderate increase in the price of medical care of $5. Does the optimal ratio change from the effects of part c & why.

A rational consumer has a utility function that follows all of the characteristics explained in class and can choose to buy either “medical care” or sushi. S/he is constrained by a weekly budget 400. Medical care costs $20 per unit and sushi $6. Graphically and verbally detail the following using proper terms, labels, and vocabulary. Utility Function=6x^1/3y^2/3 a. Draw this consumer’s utility function and budget constraint. Indicate the optimal bundle & briefly explain why. b. Consumer’s income decreases to $280 per week. c. A moderate increase in the price of medical care of $5. Does the optimal ratio change from the effects of part c & why.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter21: Demand: Consumer Choic

Section: Chapter Questions

Problem 16E

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