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maximize utility subject to the budget constraint

1. Consider the utility functions of the form . Show that the implied demand curves are (see attached file for equations) 2. Suppose a consumer will have income this year and next year. He or she consumes this year and next year, being able to borrow and lend at interest rate . Assume the consumer maximizes th

Economics inquiries

1)What role does economics play in our personal decisions? What role does economics play in the organizational decisions? 2)How does the availability of substitutes affect purchasing decisions? 3)How does a surplus or a shortage of a good or service affect the market price? How does global economic competition

Real world risk distribution

Suppose a population consists of two equally-sized groups: - Type 1 individuals have a 15% annual chance of experiencing a catastrophic health care event thaat will reduce their wealth by $40,000. - Type 2 individuals have a 25% annual chance of experiencing a catastrophic health care even that will reduce their wealth by $40,

Probability/Utility Square Roots

You have a person whose utility is U = Square root of I. They have two choices: A. Vote for action B. Vote against action. If they choose B. They get $5 Million. If they choose A. they have a 30% chance of making $80 million and 70% chance of making $1 million. So far so good. But if they make the $80 million, there is a poss

Expected Utility and Risk Aversion

We are going to have problems on the exam which give you a utility function for a person (U=2/I, or square root of I, etc), and their income with different probabilities. Like 40% chance of being fine and making $100 and 60% chance of getting hurt and paying $10 of it for medical bills or whatever. So the question will ask some

Managerial Economics

Some foolish teenagers play "chicken" on Friday nights. Two teenagers drive their cars at each other at high speeds. The first to swerve to the side is the "chicken" and loses. If both swerve out of the way, they are both chicken and both lose. Neithe4r of the drivers wants to get into an accident. It causes a significant lo

Behaving Optimally and Utility Maximization

Consider a utility-maximizing consumer who devotes all of his weekly income, I = $720 to purchases of caviar (available at the market price, px = $10 per serving) and high-end denim jeans (available at the market price py=$120 per pair). Compute this consumer's optimal consumption of caviar (x) and jeans (y) for each of the foll

Utility, Uncertainty, Adverse Selection

Please see the attachment. I require very specific explanations for each part. If necessary, assumptions may be made but please make these explicit and make sure they are reasonable so that I can follow what you did.

Household reaction on spending

The following table gives a hypothetical total utility schedule for the Cookie Monster (CM): Number of cookies Total Utility 0 0 1 100 2 200 3

Expected Utility Economic Reasoning

(See attached file for full problem descriptions) --- 1. Sam's utility function... 2. Use standard economic reasoning... 3. How does a class action differ... 4. Suppose a potential injurer... 5. Suppose that when injurers are sued... ---

Internet communication (such as email)

2.1. In the readings we saw that Internet communication (such as email) consumed on average 57% of the time spent online and Internet browsing (such as visiting web sites) used the other 43%. We also saw that the average online user in the U.S. spent approximately 3 hours per day using the Net. Assume the incremental monetary

Total Utility/Marginal Utility

The local mall has a make-your-own sundae shop. They charge customers 35 cents for each fresh fruit topping and 25 cents for each processed topping. Barara is going to make herself a sundae. The total utility that she receives from each quantity of topping is given by the table: Fresh Fruit Topping


A. Suppose first that 2 cannot pay the firm not to store waste, and the competitive price for storage is 1. Compute the Walrasian equilibrium and show that it is not Parteo efficient. Please see attached for full quesiton.

Pareto optimal levels of effort

There is a team technology in which two workers must work together in order to produce. The revenue from their efforts is given by R = (e1e2)^1/2 where ei is the effort that worker ∈ {1, 2} puts into production. Each worker's utility is given by ui = wi − ei^2 where wi is worker i's income. (a) What are the Pareto o

Utility maximization

A consumer buys five new college textbooks during his first year at school at a cost of $80 each. Used books cost only $50 each. When the bookstore announces that there will be a 10% increase in the price of new books and a 5% increase in the price of used books, the consumer's father offers him $40 extra. Is this consumer wor

I need detailed answers illustrated with graphs.

1. If the prices of A, B and C are $2. $3, and $1 respectively, and the consumer has $26 to spend on these three products, what combination of the three products should be purchased in order to maximize utility? Please show how you get the answer. (Please see file attached) 2. Can you explain and illustrate with graphs(

Consumer Behavior and Utility Maximization

Can you please answer question 1 (a-c) and question 2 (a-d). The should be approached from an Introductory Microeconomics perspective. The concept dealt with in the exercise is Consumer Behavior and Utility Maximization.

Exercise book question

In a particular country there are three types of citizens: (1) people in jail who were caught commiting crimes; (2) people who are honest and therefore not in jail; (3) people who commited crimes but were not caught and therefore not in jail. Everyone derives utility only from income. The decision to commit a crime is based on

Solve Microeconomics problem

Subject: Microeconomics problem Details: A consumer with the money-left-over utility function u(x) + m = 10 ln(x+1) +m is endowed with 100 units of x and $1000. This consumer can buy or sell the commodity in question, depending on its price. If, for instance, the price of x is $4 per unit and the consumer sells 25 units, she e

Equlibrium Level of Output in Given Market

I. Each of 5000 consumers that are buyers of goods X and Y per period has the utility function: (see attachment) where X is the number of units of good X consumed and Y represents all other goods that the consumer purchases. The income of each consumer is $1000. You may assume the price of Y is $1 per unit of other goo

I don't know where to start

1. Alex's preferences for bagels and wine can be isolated and examined. Assume that Alex's budget is $200. Bagels cost $2.00 each and wine costs $10.00 per liter. Assume that Alex spends all of his income on bagels and wine in order to maximize his total utility. a) Write the equation for his budget line. What is the slope of t

Need to solve the following problem

1. Regarding utility: a. the total satisfaction one gets from one's consumption is called marginal utility. b. if you buy one Big Mac that gives you marginal utility of 400 and a second one that gives you marginal utility of 250, total utility of eating two Big Macs is 650. c. according to the law of diminishing marginal

Supply Curve Elasticity

1. A supply curve revels- a) the highest price producers are willing to accept for each level of output b) the difference between quantity demanded and quantity supplied at each price c) the maximum level of output an industry can produce, regardless of price. d) the quantity of output that producers are willing to produce a