Consumption and leisure can be expressed

Assignment Help Business Economics
Reference no: EM13733579

Suppose that Shelly's preferences for consumption and leisure can be expressed as u(c ,l)=(c-200)×(l-80).

a) Calculate her utility, u0 , if she consumes c = $360 and enjoys l = 110 hours of leisure per week.

b) Evaluate her marginal utilities of consumption and leisure at this point and use them to determine the slope of her indifference curve at this point. [Hint:Using calculus, it can be shown that for any given level of utility u, MUc = l – 80 and that MUl = c – 200.]

c) Marginal utilities are important because they can be used to calculate the change in utility, ?u, that results from changing c and l by the small amounts ?c and ?l. The induced change in utility is approximately (?): ?u ? MUl ??l + MUc ? ?c. Based on your answers for (b), what happens to her utility if her consumption increases by ?c = $5 and her leisure declines by ?l = 1 hour?

d) Now compute her utility when c = $365 and she enjoys l = 111 hours of leisure. How close is your (approximate) calculation in part (c) to the exact calculation you just did?

Reference no: EM13733579

Previous Q& A

  Assignment- external environmental analysis

Assignment- External Environmental Analysis, Overview: You are the Vice President of Marketing for General Mills. The President would like you to conduct an external environmental analysis of the Canadian cereal category

  Draw indifference curves reflecting

Draw indifference curves reflecting the following statements:

  When interest rates decrease

When interest rates (IRs) decrease, how might businesses and consumers change their economic behavior? If there is a decline in the money growth, what might you expect to happen to real GDP (real output) and inflation rate?

  Business case tasks and deliverables

Critical Thinking: Business Case Tasks and Deliverables, Follow CSU-Global Guide to Writing and APA Requirements, Include a title and reference page

  Identify three possible dangers that officers involved

Identify three possible dangers that officers involved in undercover investigations might face. Next, suggest the mitigating actions that officers can take in order to reduce the dangers in question. Provide a rationale for your response.

  An increase in the price of a good causes

An increase in the price of a good causes a:

  Find the equilibrium price and quantity

Find the equilibrium price and quantity with QD' =80-10P and QS=10P. Find the equilibrium price and quantity with QD=60-10P and QS'=20+10P

  Equilibrium price level and the level of real output

What effects would each of the following have on aggregate demand or aggregate supply? In each case use a diagram to show the expected effects on the equilibrium price level and the level of real output. Assume all other things remain constant.

  Aggregate demand and aggregate supply curves

Suppose that the aggregate demand and supply schedules for a hypothetical economy are as shown below: Use these sets of data to graph the aggregate demand and aggregate supply curves. What is the equilibrium price level and the equilibrium level of r..

  Discuss how the child cognitively and emotionally responds

Discuss how the child cognitively and emotionally responds during the confinement from - Discuss how this experience may affect the child as he/she ages through childhood and into adulthood.

Reviews

Write a Review

 

Similar Q& A

  What is the depreciation amount for year

at what interest rate would the person earn interest if the interest was compounded annually? b) if the double declining balance (200% DB) method is used, what is the depreciation amount for year 2?

  Using excel and hand in your work as an excel file

Doing the work on paper and then writing the answers in Excel does not count as work and will earn zero points for this part of the assignment.

  Propose to model his tastes in what following way

propose to model his tastes in the following way: For any 2 bundles A and B of "grams of cocaine" and "dollars of other consumption.

  Blue line circle symbols is a demand-for-money line

The blue line circle symbols is a demand-for-money line and the orange line square symbols is a money supply line.

  Major conflict between the us army also native americans

the last major conflict between the US army also Native Americans took place at

  Calculate the short and long run price elasticities

According to a study of US cigarette sales between 1955 and 1985, when the price of cigarettes was 1% higher, consumption would be 0.4% lower in the short run and 0.75% lower in the long run (Becker et al., 1994).

  What is the probability that it will take a worker less

What is the probability that it will take a worker less than 4 minutes to complete the task? c. What is the probability that it will take a worker between 6 and 10 minutes to complete the task?

  Compare and contrast francis edgeworth contributions

Compare and contrast Francis Edgeworth’s contributions to John Bates Clark’s contributions. Who do you feel made more significant contributions to modern economic theory?

  Major league parks has dropped

Law of demand does not hold since attendance at the major league parks has dropped while at the same time ticket prices have fallen.

  In general are becoming less integrated

In general are becoming less integrated due to the widespread availability of interest rate and currency swaps

  What would be the implication of this change for this firm

Now suppose as a result of a mandated increase in the minimum wage the wage increases to $80. What would be the implication of this change for this firm?

  Conducting business under both scenario

Talk about the ramifications involved in conducting business under both/either scenario.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd