EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Chapter 10, Problem 10.4P
To determine
To ascertain:The graph of the
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Robinson Crusoe has exactly 12 hours per day to spend gathering coconuts (
C) or catching fish (F). Let tp denote the time (in hours) spent catching fish and
tc the time (in hours) spent gathering coconuts per day. Robinson can catch 3
fish per hour or he can gather 6 coconuts per hour; his "production technology"
can thus be described by: F = 3tp and C = 6tc. Robinson's utility function is
U(F,C) = FC where F is his consumption of fish and C is his consumption of
coconuts.
1.
(a) Write down Robinson's time constraint and hence find an equation for his
Production Possibility Frontier (PPF).
(b) Find the number of fish Robinson will catch per day and the number of
coconuts he will gather per day.
Say that Laura (L), Maureen (M), and Carrie
(C) are three individuals who are
contemplating the purchase of some
amount of good X. Units of X can be
produced at a constant marginal cost of 24.
The following equations show how the
marginal benefit (M B) that each individual
places on X varies with the quantity she
consumes:
L: MB(L) = 30 - X
M: MB(M) = 24 - X
C: (MB(C) = 20 - X
(a) How much of this good should they
purchase if X is a private good?
(b) How much of this good should they
purchase if X is a public good?
(c) Construct a diagram to illustrate your
answer to part b.
Pedro, a retired economics professor, grows lemons and oranges in his back- yard. He consumes some of these fruits, and sells some in a local farmer's market. Pedro's preferences are represented by the following utility function U(x, y) = min{x,y}. In one season he can harvest 20 pounds of lemons and 60 pounds of oranges. In the local market, price of lemons is $4 per pounds and price of oranges is $2 per pound. Pedro receives $300 income from his retirement plan per season. Question 1 Part a Find Pedro's optimal consumption bundle. Make sure to draw his budget con- straint and indifference curves to show his optimal choice. Question 1 Part b Suppose that the price of lemons rises to $5 per pound. What is Pedro's optimal consumption bundle now? Decompose the total change in demand due to a price change into a substitution effect, ordinary income effect and endowment income effect and graphically demonstrate it.
Chapter 10 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 10.2 - Prob. 1MQCh. 10.4 - Prob. 1MQCh. 10.4 - Prob. 2MQCh. 10.4 - Prob. 1.1MQCh. 10.5 - Prob. 1TTACh. 10.5 - Prob. 2TTACh. 10.7 - Prob. 1MQCh. 10.7 - Prob. 2MQCh. 10.7 - Prob. 3MQCh. 10.8 - Prob. 1TTA
Ch. 10.8 - Prob. 2TTACh. 10.8 - Prob. 1MQCh. 10.8 - Prob. 2MQCh. 10 - Prob. 1RQCh. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - Prob. 10RQCh. 10 - Prob. 10.1PCh. 10 - Prob. 10.2PCh. 10 - Prob. 10.3PCh. 10 - Prob. 10.4PCh. 10 - Prob. 10.5PCh. 10 - Prob. 10.6PCh. 10 - Prob. 10.7PCh. 10 - Prob. 10.8PCh. 10 - Prob. 10.9PCh. 10 - Prob. 10.10P
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