The dung beetle gets utility from consuming mud balls which are made out of mud and dung. Both inputs are measured in grams and perfectly divisible. Its utility from balls which contain m grams of mud and d grams of dung is u(m, d) = md. For reasons to do with the structural integrity of the balls, however, it cannot combine the two ingredients in very different quantities. The ratio of mud and dung it uses must fall between 1 : 2 and 2 : 1. Excess amounts of either ingredient are discarded at no cost to the dung beetle. (a) How much utility does the beetle get from the following bundles of mud and dung, (m, d)? i. (2,16). ii. (4,8). iii. (4,16). iv. (6,16/3). (b) Draw an indifference curve between mud and dung that represent the preferences of the dung beetle and gives the beetle a utility level of 32.

The dung beetle gets utility from consuming mud balls which are made out of mud and dung. Both inputs are measured in grams and perfectly divisible. Its utility from balls which contain m grams of mud and d grams of dung is u(m, d) = md. For reasons to do with the structural integrity of the balls, however, it cannot combine the two ingredients in very different quantities. The ratio of mud and dung it uses must fall between 1 : 2 and 2 : 1. Excess amounts of either ingredient are discarded at no cost to the dung beetle. (a) How much utility does the beetle get from the following bundles of mud and dung, (m, d)? i. (2,16). ii. (4,8). iii. (4,16). iv. (6,16/3). (b) Draw an indifference curve between mud and dung that represent the preferences of the dung beetle and gives the beetle a utility level of 32.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter7: Production Economics

Section: Chapter Questions

Problem 4E

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