Find the utility maximizing consumption bundle

Assignment Help Business Economics
Reference no: EM131244606

Harry purchases butterbeer (B) and chocolate frogs (C) and has the following utility function:U(B,C) = min(4B, C). He has $360 to spend on butterbeer and chocolate frogs. Suppose that the price ofbutterbeer is $4 per bottle and the price of chocolate frogs is $5 each.   

(a) Find the utility maximizing consumption bundle for Harry given his budget constraint.

(b) What would happen to the optimal consumption bundle if Harry’s income falls to $180?

Reference no: EM131244606

Questions Cloud

First order conditions of optimization from lagrangian : Suppose Jeffrey’s utility depends on the amount of time spent watching You Tube videos (Y) and the amount of time playing video games (V), and his utility function is equal to. Set up the Lagrangian equation for this constrained maximization problem...
Optimal consumption bundle of strawberries and turnips : Luke only consumes strawberries (S) and turnips (T) each week with his $36 income. The price ofstrawberries is Ps = $3/basket, while the price of turnips is Pt = $1.50/turnip. Luke’s preferences are given by the following utility function: What are t..
About concept of specialization and comparative advantage : In the first chapter, we learned about the concept of specialization and comparative advantage.  By learning these concepts, we tend to agree that specialization along lines of comparative advantage and then trade is beneficial. In your opinion, does..
Does the elimination of competition promote efficiency : Does the elimination of competition promote efficiency? Why do you think Achnacarry was a pipe-dream? please include (Opinion, Reason & Facts, Explanation, Citation)
Find the utility maximizing consumption bundle : Harry purchases butterbeer (B) and chocolate frogs (C) and has the following utility function:U(B,C) = min(4B, C). He has $360 to spend on butterbeer and chocolate frogs. Suppose that the price ofbutterbeer is $4 per bottle and the price of chocolate..
Derive the equation for the marginal rate of substitution : Jackie has the following utility function: Derive the equation for the marginal rate of substitution for this utility function. Solve for Jackie’s optimal consumption bundle.
What quantities will there be kink in the budget constraint : Suppose Lori has an income of $100 to spend on chocolate bars and ice-cream cones. She faces a price of$1 for chocolate bars. However, the price of ice-cream depends on how much you buy. The first 10 icecream cones cost Lori $2 each, but each cone af..
Find the income elasticity for good one : Find the income elasticity for good one. What does this tell us about the relationship between income and the amount of good 1 purchased? Under what circumstances does this seem a plausible model of behavior?
Find the demand functions for goods : Suppose an individual consumers two goods, with utility function U (x1, x2) = x1 + 6sqrt(x1x2) + 9x2. Formulate the consumers utility maximization problem when she faces a budget line p1x1 + p2x2 = I. Find the demand functions for goods 1 and 2.

Reviews

Write a Review

 

Business Economics Questions & Answers

  The real price of movie ticket was the same in both years

In 1976 a movie ticket was $4 and the price index was 56. In 2009 a movie ticket was $9 and the price index was 228. Based on this information: The real price of a movie ticket was the same in both years.

  GPI is a highly objective alternative to GDP

GPI is a highly objective alternative to GDP. The main flaw with GDP is that it only includes final goods and services not primary and intermediate good production. Net Domestic Product is GDP after taxes. Over time, the U.S. economy seems to grow ab..

  The economy is no longer in an equilibrium

Comment on the following statement: “When aggregate demand falls below the current output level, an unintended inventory accumulation occurs and the economy is no longer in an equilibrium.”

  Borrow now to carry out entire project including maintenance

A structure with a 40 year life span has an initial cost of $800,000. maintenance costs will be $30,000 every 5 years. how much money should the city borrow now to carry out the entire project including maintenance . the interest rate is 5%.

  Positive also negative contributions of fdi inflow

Converse the positive also negative contributions of FDI inflow to the competitive benefit of host countries with regard to the subsequent matters

  Elucidate decrease in aggreage demand will lead to

If combination of rational expectation and perfectly competitive markets , a decrease in aggreage demand will lead to? A. A small decrease in real GDP B. No change in real GDP C.

  Calculate the opportunity cost of capital for mark

Suppose Mark invests a sum of $100,000 in a new venture. To fund his investment, Mark withdraws $50,000 from a savings account paying 10% per year and uses the proceeds from a bond that has just matured worth $50,000. If he had reinvested the proceed..

  How has the world wide web supported the businesses

1). List three businesses that can exist today, because of the World Wide Web that could not have existed before the advent of this technological communication system. 2). How has the World Wide Web supported the establishment and functioning of th..

  Situations involves screening or signalling

Say whether each of the following situations involves screening or signalling.

  The quantity demanded equal to the quantity supplied

Hurricane Katrina damaged a large portion of refining and pipeline capacity when it swept through the Gulf coast states in August 2005. As a result of this, many gasoline distributors were not able to maintain normal deliveries. the quantity demanded..

  Auto repair facility in a remote area of the nevada desert

Jimbob’s Garage is the only auto repair facility in a remote area of the Nevada desert. The proprietor, Jimbob, does not post his prices for services. Knowing his customers are travelers who are desperate to get their vehicles repaired, he sizes each..

  If producing a good generates pollution

If producing a good generates pollution (a negative externality), from a social perspective ...

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