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
Describing Risk * To measure risk we should know:  1) All the outcomes which are possible.  2) The probability that each outcome will occur. * Interpreting Probability

Sources of external economies of scale: Economies of Skilled Labour: This involves upgrading the skills of labour through the provision of education and training faci

what will cause a firms demand curve to shift: a a change in sellers profit associated with the good or service b change in technology for good cchange in non price variable in dem

In this part, use the results for market demand for short-run and long run market supply of good x1 obtained in parts one and two. When a change (e.g. income or taxes) is introduce


Economic growth and Economic development: Economic Growth refers to an increase in real aggregate output (real GDP) reflected in increased real per capita income.A country is

Use two market diagrams to explain how an increase in state subsidies to public colleges might affect tuition and enrollments in both public and private colleges.

Mediterranean Regional Project (MRP) Technique This technique had been initially employed by the OECD (Organisation of Economic Cooperation and Development, Europe) to prepare

Economies of Scale The reduction in the cost of each additional unit produced as all factors of production increase. Factors contributing to economies of scale include discoun

what is cardinal utility. Please give an example