Suppose a consumer likes both pancakes and waffles and is always willing to substitute two pancakes for one waffle. (i) Write down their utility function. Show all steps. (ii) What is MRS of Pancake for Waffles? (iii) Using the indifference curve, draw the Utility function U = 4 and U = 8
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- Is it possible for total utility to increase while marginal utility diminishes? Explain.Take Jeremys total utility information in Exercise 6.1, and use the marginal utility approach to confirm the choice of phone minutes and round trips that maximize Jeremys utility.Please no written by hand and no emage Consider a consumer that consumes 2 teaspoons of sugar with each cup of coffee. For each cup of coffee with sugar the consumer gains 10 utils.a) Write down the utility function that gives the total utility if the consumer consumes S teaspoons of sugar and C cups of coffee. The consumer has assigned £7 per week to be spent on drinking coffee with sugar. The current price of coffee is £0.50 per cup and each spoon of sugar costs £0.10. b) Calculate the optimal weekly consumption bundle for this consumer.c) Does the consumer view C and S as complements or substitutes?
- Suppose that the consumerís preferences are given by refer to image for the restChewing gum (packs per day) 4 12 2 2 4 6 Water (bottles per day) The figure above shows three of a consumer's indifference curves. Which point is most preferred? Point Jonly O Point Conly Doint Goply(a) I like to consume two olives with every shot of vodka. If Ihave more olives or more vodka than that ratio, I just toss theextra in the trash (they are perfect complements). What is myutility function? What do my indifference curves look like? (b) I like drinking Smirnoff and Stoli Vodka, but I really only careabout the total amount of alcohol I get out of it. They areperfect substitutes. Smirnoff is sold in liter bottles that are100 proof (that’s 50% alcohol). Stoli is sold in liter bottlesthat are 80 proof (40% alcohol). What is my utility functionfor bundles of these two vodkas? What do my indifferencecurves look like? (c) Antonin notices he is currently spending all of his money ona bundle (x1, x2) where his marginal rate of substitution isgreater than the relative prices (p1/p2). Can Antonin reach abundle on a higher indifference curve with his current income?Explain clearly and provide a graph with your response. * Note that in (a) and (b), there are different utility…
- 4. Liam initially has a weekly allowance of €24 to spend on eggs (at €0.40 per egg) and beans (at €0.80 per tin). Liam will only consume 4 eggs with each tin of beans and never changes this proportion. (a) What is the utility maximising amount of eggs and beans that Liam buys each week? (b) Suppose the price of eggs rise to €0.60 per egg but the price of beans falls to €0.60 per tin. At the same time, Liam's weekly allowance rises to €30. How much of each good will Liam now buy? Compare your answer to that in (a) and explain the difference, if there is one. Use a diagram to complement your answer.U(x, y) = xayb A consumer maximises utility subject to a budget constraint M = Pxx+Pyy Where px is the price of good x, py is the price of good y and M is the budget available. a. Derive an expression for the marginal utility of x. Under what condition is the marginal utility diminishing. b. Derive an expression for the marginal utility of y. Under what condition is the marginal utility diminishing.Suppose that you go to a restaurant with your friends. a) One of your friends always eat exactly one chicken wrap (C) and drinks two cups of ayran (A). He never changes this combination of food choice. (i) Write the utility function of your friend to represent his preferences. (ii) Draw couple of indifference curves of your friend on graph with appropriate labels. (iii) Determine the demand function of your friend for each product as a function of prices and income. Denote prices as Pc, Pa; income as M. b) Suppose that one of your friends does not care if she consumes spaghetti(S or noodle(N).She wants to consume either two-dish spaghetti or two-dish noodle or any combination of both which adds up to two dishes. (i) Write the utility function of your friend to represent his preferences. (ii) Draw couple of indifference curves of your friend on graph with appropriate labels. (iii) Denote prices as Pn, Ps; income as M. If Pn < Ps, then determine the demand…
- if the total utility of consuming the first three pieces of pizza were 50,80, and 95 respectively , the marginal utility of the third silce of pizza is?Quèstion 7 When total utility begins to decline marginal utility will be positive but it will decrease О Tue FalseA consumer buys Bread (B) and Milk (M) each week at price of 20 and 16 respectively. Suppose that the consumer's current consumption of Bread and Milk is giving him MUBread = 80 and MUMilk = 70. Is the consumer buying the utility-maximizing combination of bread and milk? If not, how should he reallocate his expenditures between the two goods to maximize utility? Draw diagram and explain.