Info in images Columns 1 through 4 in the following table show the marginal utility, measured in utils, that Ricardo would get by purchasing variousamounts of products A, B, C, and D. Column 5 shows the marginal utility Ricardo gets from saving. Assume that the prices of A, B, C,and D are, respectively, $36, $12, $8, and $24 and that Ricardo has an income of $281.Column 1Column 2Column 3Column 4Column 5Units ofUnits ofUnits ofUnits ofNumber ofMUMUMUMUMUGood AGood BGood CGood DDollars Saved1721241151361254151223024451224436447418422775131186.6.46.76.0.507157273.57470.25128138280.13 Instructions: Enter your answers as a whole number.a. What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility?4units of A1* units of Bunits of C3units of Db. How many dollars will Ricardo choose to save?17c. Check your answers by substituting them into the algebraic statement of the utility-maximizing rule.364+ $241 *+ $83+ $243172$281%24%24

Answer: Introduction: To maximize utility the consumer will purchase that unit of good where the…

Instructions: Enter your answers as a whole number. a. What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility? 4 units of A 1 8 units of B 3 units of C units of D b. How many dollars will Ricardo choose to save? $ 17 * c. Check your answers by substituting them into the algebraic statement of the utility-maximizing rule. ($ 36 O 4 + $ 24 8 x 1 8 + $ 8. 3. + $ 24 O x 3 + $ 17 281 O

Instructions: Enter your answers as a whole number. a. What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility? 4 units of A 1 8 units of B 3 units of C units of D b. How many dollars will Ricardo choose to save? $ 17 * c. Check your answers by substituting them into the algebraic statement of the utility-maximizing rule. ($ 36 O 4 + $ 24 8 x 1 8 + $ 8. 3. + $ 24 O x 3 + $ 17 281 O

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.9P

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Columns 1 through 4 of the accompanying table show the marginal utility, measured in utils, that Ricardo would get by purchasing various amounts of products A, B, C, and D. Column 5 shows the marginal utility Ricardo gets from saving. Assume that the prices of A, B, C, and D are $18, $6, $4, and $24, respectively, and that Ricardo has an income of $105. What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility? How many dollars will Ricardo choose to save? Check your answers by substituting them into the algebraic statement of the utility‑maximizing rule. In other words, show it works when using this rule.
Columns 1 through 4 in the following table show the marginal utility, measured in utils, that Ricardo would get by purchasing various amounts of products A, B, C, and D. Column 5 shows the marginal utility Ricardo gets from saving. Assume that the prices of A, B, C, and D are, respectively, $18, $6, $4, and $24 and that Ricardo has an income of $106. a. What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility? b. How many dollars will Ricardo choose to save? c. Check your answers by substituting them into the algebraic statement of the utility-maximizing rule.
Tom's income is 32. He consumes a single consumption good, C, which has a price of 2. His utility function depends on his marital status: when happily married, his utility is given byU=C^(1/2) When he is not married, his utility is given by U=0.5C^(1/2) a. Suppose that Tom is not currently married. What is his utility? Now suppose that Tom gets married.What is his utility? Assume Tom can spend all his income on his own consumption when he is married. b. Use compensating variation (CV) and equivalent variation (EV) to calculate the value of marriage to Tom. How do the two figures compare?
Suppose you have a monthly income of $1000, $850 in monthly expenses, and you can put money in a savings account that yields a monthly interest rate of 4%. Now suppose you have an opportunity to invest your money at a 12% return. Further suppose you are able to borrow at 3%. Assuming you invest all of your money and then borrow against your future payout, show your trade-off between present and future consumption. If you still need to consume $850 in the present, how much will you have to spend in the future?
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Suppose that Omar’s marginal utility for cups of coffee is constant at 1.5 utils per cup no matter how many cups he drinks. On the other hand, his marginal utility per doughnut is 10 for the first doughnut he eats, 9 for the second he eats, 8 for the third he eats, and so on (that is, declining by 1 util per additional doughnut). In addition, suppose that coffee costs $1 per cup, doughnuts cost $1 each, and Omar has a budget that he can spend only on doughnuts, coffee, or both. How big would that budget have to be before he would spend a dollar buying a first cup of coffee?
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Amadea spends all her income on pizza,chocolate milk, and music streams. The price of pizza is $4 per slice and price ofchocolate milk $2 per bottle. At Amadea's current consumption level, her marginalutility for pizza is 50 units per slice and for music 100 units per stream. Assuming thatAmadea is a utility maximizer, how much is (a)her current marginal utility for a bottleof chocolate milk, and (b) the price of streams she buys. Show your work. [Hint: Ch 6:Utility-maximizing formula)
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