Price Marginal Product Input 1 $10 4 Input 2 $15 A Input 3 $20 B Refer to the table above. If A = 6 and B = 10, which of the following is true? O The firm should buy more of Input 1 and less of Inputs 2 and 3. O The firm should buy more of Input 2 and less of Inputs 1 and 3. O The firm should buy more of Input 3 and less of Inputs 1 and 2. O The firm is minimizing costs.

Price Marginal Product Input 1 $10 4 Input 2 $15 A Input 3 $20 B Refer to the table above. If A = 6 and B = 10, which of the following is true? O The firm should buy more of Input 1 and less of Inputs 2 and 3. O The firm should buy more of Input 2 and less of Inputs 1 and 3. O The firm should buy more of Input 3 and less of Inputs 1 and 2. O The firm is minimizing costs.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 3SQP

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Penelope utility function is U (a, b) = a+ 10b−b2, where a is the amount of applesconsumed and b is the amount of bananas consumed. He has $100 income. Theprice of apple is $0.5 per lb. Price of banana’s though increases with its purchase.Specifically, buying, b pounds of bananas will cost Pedro b2.a. What is Penelopes optimal consumption?b. Now, he suddenly acquires an extra $100 income. How this will changehis allocation?
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