ECON1001 Case Study - Word困FileHomeInsertDesignLayoutReferencesMailingsReviewViewACROBATTell me what you want to do..& ShareQuestion 3Douglas allocates his budget of $24 per week to 3 goods, cereal, books andclothing. Use the table below to answer the following questioni.Total Utility ofCerealTotal Utility ofВooksTotal Utility ofClothingQuantity1507525290135453120175601402057015522578books is $3 and the pricea. If the price of cereal is $2, the priceis $1, at what point does Douglas maximize his utility? Explain.clothingii.Mr. Robinson makes $200 a week and spends his entire income on runningshoes and basketball shorts.a. Write down the algebraic expression for his budget constraint if runningshoes and basketball shorts cost $20 each. How many of each good will hebuy?b. Write down the algebraic expression for Mr. Robison's budget constraint ifthe price of basketball shorts rises to $30 each. How many of each good willhe buy?c. Illustrate the results in parts (a) and (c) and provide a decomposition of theincome and substitution effect.3Page 3 of 61404 wordsE English (United States)100%10:55O Type here to search日IA22°Ca 4») ENG25/03/2022

Hi! Thank you for the question As per the honor code, We’ll answer the first question since the…

Douglas allocates his budget of $24 per week to 3 goods, cereal, books and clothing. Use the table below to answer the following question Total Utility of Cereal Total Utility of Total Utility of Clothing 25 Quantity Вooks 1 50 75 90 135 45 3 120 175 60 4 140 205 70 155 225 78 a. If the price of cereal is $2, the price of books is $3 and the price of clothing is $1, at what point does Douglas maximize his utility? Explain.

Douglas allocates his budget of $24 per week to 3 goods, cereal, books and clothing. Use the table below to answer the following question Total Utility of Cereal Total Utility of Total Utility of Clothing 25 Quantity Вooks 1 50 75 90 135 45 3 120 175 60 4 140 205 70 155 225 78 a. If the price of cereal is $2, the price of books is $3 and the price of clothing is $1, at what point does Douglas maximize his utility? Explain.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter21: Demand: Consumer Choic

Section: Chapter Questions

Problem 1E

See similar textbooks

Similar questions

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.
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.
Is it possible for total utility to increase while marginal utility diminishes? Explain.
Praxilla, who lived in ancient Greece, derives utility from reading poems and from eating cucumbers. Praxilla gets 30 units of marginal utility from her first poem 27 units of marginal utility from her second poem 24 units of marginal utility from her third poem, and so on, with marginal utility declining by three units for each additional poem. Praxilla gets six units of marginal utility for each of her next three cucumbers consumed, five units of marginal utility for each of her next three cucumbers consumed, four units of marginal utility for each of the following three cucumbers consumed, and so on, with marginal utility declining by one for every three cucumber consumed. A poem costs three bronze coins hut a cucumber costs only one bronze coin. Praxilla has 18 bronze coins. Sketch Praxillas budget set between poems and cucumbers, placing poems on the vertical axis and cucumbers on the horizontal axis. Start off with the choice of zero poems and 18 cucumbers, and calculate the changes in marginal utility of moving along the budget line to the next choice of one poem and 15 cucumbers. Using this step-by-step process based on marginal utility, create a table and identify Praxillas utilityâ€”maximizing choice. Compare the marginal utility of the two goods and the relative prices at the optimal choice to see if the expected relationship holds. Hint: Label the table columns: 1) Choice, 2} Marginal Gain from More Poems, 3) Marginal Loss from Fewer Cucumbers, 4) Overall Gain or Loss, 5) Is the previous choice Optimal? Label the table rows: 1) 0 Poems and 18 Cucumbers, 2) 1 Poem and 15 cucumbers, 3) 2 Poems and 12 cucumbers, 4) 3 Poems and 9 Cucumbers, 5) 4 Poems and 6 cucumbers 6) 5 Poems and 3 Cucumbers, 7) 6 Poems and 0 Cucumbers.