Lucy's company has just promoted her to a managerial position and given her a new office. She is very fond of small Persian carpets and Native American paintings and wants to get some carpets and paintings for her office. Her utility function for carpets (x) and paintings (y) is given by Use Problem 8.1 U(x,y) = /xy Using Excel's charting tool, draw an indifference curve for U = 4 and another one for U = 6, where both indifference curves contain 1, 2, 4, and 8 carpets on a graph, with carpets on the horizontal axis and paintings on the vertical axis. As described in Exercise 8.1, Lucy wants carpets and paintings for here office. Her company has given her a budget of $7200 for this purpose. Persian carpets of the size that she wants can be Problem 8.2 purchased for $900 each and paintings from a local Native American artist cost $400 each. b. Combining the information in problem 8.1 and 8.2a, Use Excel to illustrate Lucy's utility- maximizing solution given that her budget is $5,000, the price of a carpet is $1000, and the price of a painting is $500.
Lucy's company has just promoted her to a managerial position and given her a new office. She is very fond of small Persian carpets and Native American paintings and wants to get some carpets and paintings for her office. Her utility function for carpets (x) and paintings (y) is given by Use Problem 8.1 U(x,y) = /xy Using Excel's charting tool, draw an indifference curve for U = 4 and another one for U = 6, where both indifference curves contain 1, 2, 4, and 8 carpets on a graph, with carpets on the horizontal axis and paintings on the vertical axis. As described in Exercise 8.1, Lucy wants carpets and paintings for here office. Her company has given her a budget of $7200 for this purpose. Persian carpets of the size that she wants can be Problem 8.2 purchased for $900 each and paintings from a local Native American artist cost $400 each. b. Combining the information in problem 8.1 and 8.2a, Use Excel to illustrate Lucy's utility- maximizing solution given that her budget is $5,000, the price of a carpet is $1000, and the price of a painting is $500.
Chapter3: Preferences And Utility
Section: Chapter Questions
Problem 3.7P
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Transcribed Image Text:Lucy's company has just promoted her to a
managerial position and given her a new office.
She is very fond of small Persian carpets and
Use
Problem 8.1
Native American paintings and wants to get some
carpets and paintings for her office. Her utility
function for carpets (x) and paintings (y) is given by
U(x, y) = vxy
Using Excel's charting tool, draw an indifference
curve for U = 4 and another one for U = 6, where
both indifference curves contain 1, 2, 4, and 8
carpets on a graph, with carpets on the horizontal
axis and paintings on the vertical axis.
As described in Exercise 8.1, Lucy wants carpets
and paintings for here office. Her company has
given her a budget of $7200 for this purpose.
Problem 8.2
Persian carpets of the size that she wants can be
purchased for $900 each and paintings from a local
Native American artist cost $400 each.
b. Combining the information in problem 8.1 and
8.2a, Use Excel to illustrate Lucy's utility-
maximizing solution given that her budget is
$5,000, the price of a carpet is $1000, and the price
of a painting is $500.
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