MICROECONOMICS >IA<
FD Edition
ISBN: 9781260511055
Author: McConnell
Publisher: MCG
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Chapter 7.A, Problem 2AP
To determine
The indifference curve and total utility.
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Suppose Charlie has a utility function U(1, 2) = min{20, 5æ2} and that initially
the price of x2 is 5 and the price of 21 is 1, and that initially in the optimal bundle
Charlie consumes 20 units of æ1. If the price of 1 then changes to 3, what is the
new optimal amount of a1?
None of the other answers are correct
O 12
15
O 10
4.
To determine the utility maximizing consumption of two products one uses the formula that is
called the rule for maximizing utility:
OP1/P2-MU1/MU2 which also is stated as MU1/PU1-MU2/P2..
OExplains the Diamond-Water Paradox.
O Calculates the utility maximizing consumption of the two goods.
All of the above are correct.
None of the above are correct.
3- Suppose there are two agents Ahmet and Berk in an economy, and both consume two goods X and Y. Also assume that price of X is 2 YTL and Y is the numeraire good, thus price of Y is 1 YTL. Ahmet and Berk has the following utility functions:UAhmet (XA,YA)= 5ln(XA)+ln(YA)UBerk (XB,YB)= XB0,5 YB0,5a. Now assume that both X and Y are private goods. Write down the optimality condition for both agents. Then, write down the optimal level of X as a function of Y for both agents.
Chapter 7 Solutions
MICROECONOMICS >IA<
Ch. 7.1 - Prob. 1QQCh. 7.1 - Prob. 2QQCh. 7.1 - Prob. 3QQCh. 7.1 - Prob. 4QQCh. 7.A - Prob. 1ADQCh. 7.A - Prob. 2ADQCh. 7.A - Prob. 3ADQCh. 7.A - Prob. 1ARQCh. 7.A - Prob. 2ARQCh. 7.A - Prob. 1AP
Ch. 7.A - Prob. 2APCh. 7.A - Prob. 3APCh. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - Prob. 3DQCh. 7 - Prob. 4DQCh. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - Prob. 8DQCh. 7 - Prob. 9DQCh. 7 - Prob. 10DQCh. 7 - Prob. 1RQCh. 7 - Prob. 2RQCh. 7 - Prob. 3RQCh. 7 - Prob. 4RQCh. 7 - Prob. 5RQCh. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7P
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