Please answer any one of the following discussion questions and reply to one of your peer's responses before the deadline. Question 1: Consumer Choice Mike loves playing PS5 games and Nintendo games. Notate the number of PS5 games as Np, the number of Nintendo games as Nn. His utility function is U(Np. Nn) = 2 × Np × Nn %3D The prices of each PS5 game or Nintendo game are the same, which is $40. Suppose he has $400 to spend on them. (1) What is the equation for his budget line? (2) Solve mathematically for her optimal consumption bundle. (Hint: it is a constrained maximization problem) Then, show how to determine this bundle in a diagram using difference curves and a budget line. (insert an image with Nn on the vertical axis) (3) What will be the new optimal consumption bundle if we replace the utility function with U(Np, Nn) = Np × Nn Explain your answer.
Please answer any one of the following discussion questions and reply to one of your peer's responses before the deadline. Question 1: Consumer Choice Mike loves playing PS5 games and Nintendo games. Notate the number of PS5 games as Np, the number of Nintendo games as Nn. His utility function is U(Np. Nn) = 2 × Np × Nn %3D The prices of each PS5 game or Nintendo game are the same, which is $40. Suppose he has $400 to spend on them. (1) What is the equation for his budget line? (2) Solve mathematically for her optimal consumption bundle. (Hint: it is a constrained maximization problem) Then, show how to determine this bundle in a diagram using difference curves and a budget line. (insert an image with Nn on the vertical axis) (3) What will be the new optimal consumption bundle if we replace the utility function with U(Np, Nn) = Np × Nn Explain your answer.
Chapter21: Demand: Consumer Choic
Section: Chapter Questions
Problem 1E
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Transcribed Image Text:Please answer any one of the following discussion questions and reply
to one of your peer's responses before the deadline.
Question 1: Consumer Choice
Mike loves playing PS5 games and Nintendo games. Notate the number of PS5 games
as Np, the number of Nintendo games as Nn. His utility function is
U(Np, Nn) = 2 x Np x Nn
The prices of each PS5 game or Nintendo game are the same, which is $40. Suppose
he has $400 to spend on them.
(1) What is the equation for his budget line?
(2) Solve mathematically for her optimal consumption bundle. (Hint: it is a constrained
maximization problem) Then, show how to determine this bundle in a diagram using
difference curves and a budget line. (insert an image with Nn on the vertical axis)
(3) What will be the new optimal consumption bundle if we replace the utility function
with U(Np, Nn) = Np x Nn Explain your answer.
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