Utility and consumer surplus, Microeconomics

Jeremy is an economics student who loves hamburgers. He could eat any number of them for dinner, but he gets a really bad stomach ache after eating a certain amount. In fact, his utility function for hamburgers is given by:

U(q) =10q = q2/2

where q is the number of hamburgers he eats for dinner (with q ≥ 0).

(a) How many hamburgers can Jeremy eat before he gets a stomach ache (that is, before his utility becomes negative)?

(b) Calculate the optimal number of hamburgers that Jeremy can eat as a function of p, the price per hamburger. (Hint: You have to maximize Jeremy's "net utility". That is, his utility minus the amount he spends on hamburgers.)

(c) Derive Jeremy's inverse demand for hamburgers.

(d) Compute Jeremy's consumer surplus as a function of p.

(e) Show that Jeremy's net utility as a function of p coincides with his consumer surplus

 

Posted Date: 3/9/2013 1:25:32 AM | Location : United States







Related Discussions:- Utility and consumer surplus, Assignment Help, Ask Question on Utility and consumer surplus, Get Answer, Expert's Help, Utility and consumer surplus Discussions

Write discussion on Utility and consumer surplus
Your posts are moderated
Related Questions

Suppose a banking system with the following balance sheet has no excess reserves. Assume that banks will make loans in the full amount of any excess reserves that they acquire and


Determinants of the price elasticity of demand are explained below: 1. Number of close substitutes present within the market - The more and closer substitutes available in the

Mg(OH)2 + 2HCl-----> MgCl2 +2H2O how many grams of magnesium chloride can be produced from 14.60mL of a 0.546M hydrogen chloride solution?

What main features are found in oligopolies? Assumptions of oligopoly Four or five firm concentration ratio Frequently there are benefits of scale to be had Merg


Below are three questions. WRITE A BRIEF NOTE OF EXPLANATION IN ANSWER TO EACH PART OF EACH QUESTION. The marks awarded will depend on the quality of the reasoning exhibited and th

true or false ,It is not possible for the compensated own price elasticity to equal the uncompensated own price elasticity.uestion #Minimum 100 words accepted#

Elasticities of supply and demand Other Demand Elasticities           – Income elasticity of demand calculates the percentage change in quantity demanded resulting fro