shoues Bre preducdin Possibilitiestrontiers (PPF5) 3. The follocoring of individuais A and Bboe. pradudim ob brand and apples pur day : PPp ob Indv. A Apples PPF of indu. B Apples Bread Bread 12 24 18 12 12 36 24 Witkout specialiation and trede , indv. A praduas and conmemes 12 units of Bread and 12 units of apples; chile ndu.B produes and consumes 3 6 units of bread aud 18 units of apples. a) Calculate opportunity Costs of bread andd apples for indv. A and B; and indicate if thiy have f bread and apples. any compax ative advantoges in production ) Suppese thiey agree ti spteiolige aud irade ; them etzo sperialyes cohat and nhat would be the new tzzms of éxchange ?" ) I Lustrate a situalioi shere both ndividuals are boetter off after specialization and trade , on

shoues Bre preducdin Possibilitiestrontiers (PPF5) 3. The follocoring of individuais A and Bboe. pradudim ob brand and apples pur day : PPp ob Indv. A Apples PPF of indu. B Apples Bread Bread 12 24 18 12 12 36 24 Witkout specialiation and trede , indv. A praduas and conmemes 12 units of Bread and 12 units of apples; chile ndu.B produes and consumes 3 6 units of bread aud 18 units of apples. a) Calculate opportunity Costs of bread andd apples for indv. A and B; and indicate if thiy have f bread and apples. any compax ative advantoges in production ) Suppese thiey agree ti spteiolige aud irade ; them etzo sperialyes cohat and nhat would be the new tzzms of éxchange ?" ) I Lustrate a situalioi shere both ndividuals are boetter off after specialization and trade , on

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter2: Mathematics For Microeconomics

Section: Chapter Questions

Problem 2.16P

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Pisa Pizza, a seller of frozen pizza, is considering introducting a healthier version of its pizza that will be low in cholesterol and contain no trans fats. The firm expects that sales of new pizza will be $20 million per year. While many of these sales will be to new customers, Pisa Pizza estimaes that 40% will come from customers who switch to the new, healthier pizzai nstead of buying the original version. a) Assume cusotmer will spend the same amount on either version. What level of incremental sales is associated with introducing the new pizza? b) Suppose that 50% of hte cusomters who will switch from Pisa Pizza's orignial pizza to its healthier pizza will switch to another brand if Pisa PIzza does not introduce a healthier pizza. What level of incremental sales is associated with introducing the new pizza in this case?
EXERCISE 1Below is a production possibilities table for consumer goods (Food) and capital goods(Robots):A B C D EFood 0 1 2 3 4Robots 10 9 7 4 01. Show these data graphically. Upon what specific assumptions is this productionpossibilities curve based?2. If the economy is at point C, what is the cost of one more food? Of one morerobot? Explain how the production possibilities curve reflects the law ofincreasing opportunity costs.3. If the economy characterized by this production possibilities table and curvewere producing 3 food and 2 robots, what could you conclude about its use ofavailable resources?4. What would production at a point outside the production possibilities curveindicate? What must occur before the economy can attain such a level ofproduction?EXERCISE 2Explain how (if at all) each of the following affects the location of a country’s productionpossibilities curve:1. The quality of education increases.2. The number of unemployed workers increases.3. A new technique…
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. On a given evening, J. P. enjoys the consumption of cigars (c) and brandy (b) according to thefunctionU (c, b) = 20c - c2 +18b- 3b2.How many cigars and glasses of brandy does he consume during an evening? (Cost is no objectto J. P.)b. Lately, however, J. P. has been advised by his doctors that he should limit the sum of glasses ofbrandy and cigars consumed to 5. How many glasses of brandy and cigars will he consumeunder these circumstances?
Consider Bob's decision problem: Sunny Cloudy Rainy Beach 2 3 2 Park 3 3 2 Mall -1 1 x Suppose the probability of Sunny is 0.25, the probability of Cloudy is 0.25, and the probability of Rainy is 0.5. What is the smallest value of x for which Mall is an expected utility maximiser? Round your answer to one decimal place (e.g. 0.5).
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A consumer has utility u(x,y,z)= ln(x) + 2ln(y) + 3ln(z) over the three goods, x,y and z and pZ = 1 . Optimally sheconsumes 30 units of z. What is her income? How much money does she spend on x?(HINT: MUX =??, MUY =??, MUZ =??and remember the “equivalent bang for the buck” condition)(b) Forget about (a). Suppose you have t = 29 hours in total to spend on 3 projects X, Y and Z to make some money.If you spend x hours on project X, you make 2√? dollars;If you spend y hours on project Y, you make ?√? dollars;If you spend z hours on project Z, you make ?√? dollars;Writing down your “utility function” u(x,y,z) and the constraint, solve the utility maximization problem; what isthe optimal amount of time to spend on x ? on y? on z ?
Application of new better technology shiftssupply leftwards.Select one:0a. TrueO b. False
ASAP Consider an individual for whom utility is U = ln(I) There are two states of the world (G,B): Outcome G = 2000 with probability .4 Outcome B = 1000 with probability .6 W1 = 2000 L = 1000 π = .6 Option = invest $50 to lower π to .2 An insurance company is willing to offer a contract in which the individual pays a premium and gets full compensation for the loss (1000) in the bad state. a) With no insurance but the option of investing the $50, what is the utility of the individual? b) What is the first-best outcome for utility of the individual, insurance premium, and profits of the insurance company?
Clancy has $4800. He plans to bet on a boxing match betweenSullivan and Flanagan. He finds that he can buy coupons for $6 thatwill pay off $10 each if Sullivan wins. He also finds in another storesome coupons that will pay off $10 if Flanagan wins. The Flanagantickets cost $4 each. Clancy believes that the two fighters each have aprobability of ½ of winning. Clancy is a risk averter who tries tomaximize the expected value of the natural log of his wealth. Whichof the following strategies would maximize his expected utility? (a) Don’t Gamble (b) Buy 400 S tickets and 600 F tickets(c) Buy exactly as many F tickets and S tickets (d) Buy 200 S and 300 F(e) Buy 200 S and 600 F
Suppose seller decreas price by 10% then hiw total revene will affect when ed =1.5 or ed=0.5 or ed=1