Calculate lola utility maximizing bundle

Assignment Help Business Economics
Reference no: EM131413898

Problem 1: Lola from La Jolla consumes housing (H) and food (F). Her student stipend is$600/month.She has a utility function of U(H, F)=FH2 where MUH =2FHand MUF = H2.The current prices are $1 per unit offood and $10 per unit of housing.

(a) Prove that she will consume 40 units of housing and 200 units of food.

(b) The government is worried that her 40 units of housing isn't enough.They agree to subsidize her housing by 50%, lowering the price sheactually pays for housing to $5.If the price of food is $1 and theprice of housing is $5, calculate Lola's optimal bundle of goods.

(c) How much does The Government spend on this program?(c) Calculate her utility level using the utility function above and the quantities consumed with the subsidy.

(d) Calculate Lola's utility maximizing bundle and her resulting utilitylevel if the government chooses to simply give her the money theywould have spent on the program (rather than subsidize housing).Given the two programs cost the same, which one is better for Lola?

Reference no: EM131413898

Questions Cloud

What is its value in 10 years’ time : The supplier gives you an option of either a 5-year car loan at a reduced APR of 7%, or £1,250 in cash and a 5-year car loan with an APR of 10%. Which choice is the better? If you depreciate the car at 20% a year, what is its value in 10 years' ti..
How much does praise and recognition improve motivation : When was the last time (a) your manager, and/or (b) a coworker praised you and made you feel important? How much does praise and recognition improve motivation (if any)
Choose a specific event that has affected homeland security : What was the event? What impact did it have? What was the response? Was the response successful in the aftermath? Should the response have been different?
Identify the cultural diversity dilemma and the stake holder : Locate an event on any college campus (within the last 5 years).  Identify the cultural diversity dilemma(s) and the stake holders. Identify some elements of oppression etc.
Calculate lola utility maximizing bundle : Calculate Lola's utility maximizing bundle and her resulting utilitylevel if the government chooses to simply give her the money theywould have spent on the program (rather than subsidize housing).Given the two programs cost the same, which one is..
Edwards sinners in the hands of an angry god : You are going to write a 2 page (not counting the works cited page) paper in proper MLA format in which you give your opinion on how the works we have read have influenced United States culture as you perceive it today.
How does this change if the interest is paid more frequently : How much will an initial investment of $1,000 earning interest of 8% a year be worth at the end of 20 years? How does this change if the interest is paid more frequently?
Adverse childhood expercience : Paper of a case study that is a victim of an Adverse childhood expercience. And I need someone that can give me a working thesis.
How the skills fit into the traditional element of schooling : Lastly, discuss how these skills fit into the traditional element of schooling that focuses on ensuring that all students develop the basic skills of reading, writing, and mathematics.

Reviews

Write a Review

Business Economics Questions & Answers

  Rate r of the transmission link

Incorporate some form of weighted fair queueing in the head-of-line priority system so that the low-priority traffic is guaranteed to receive r bps out of the total bit rate R of the transmission link.

  Who has more information in the job market

Who has more information in the job market: the job seeker or the potential employer? Why? What information does one person have that the person does not? "All our projects are discounted at the same interest rate," says the treasurer of a large comp..

  What is the present worth of the investment

Nancy’s Notions pays a delivery firm to distribute its products in the metro area. Delivery costs are $31,000 per year. Nancy can buy a used truck for $9,500 that will be adequate for the next 3 years. Operating and maintenance costs are estimated to..

  Explain why a system of marketable pollution permits leads

Explain why a system of marketable pollution permits leads to less costly pollution abatement and a higher concentration of polluted areas than a command and control system.

  Economy-net taxes and government spending

Suppose that in an economy, net taxes and governemnt spending are independent of income. It is determined that when government spending falls by $200 billion income falls by $800 billion. What is the MPS? What is the MPC?

  Suppose a worker is offered a wage of 5 per hour plus a

suppose a worker is offered a wage of 5 per hour plus a fixed payment of 40. what is the equation for the worker

  Q foreign-born population which countries have the most the

q. foreign-born population which countries have the most? the united nations department of economic and social affairs

  Heart plus faces a cost of holding inventory

Heart Plus faces a cost of holding inventory that is higher than its competitors. The salespeople are clearly overstocking hospitals in their territory. They have asked you to figure out how to fix the problem. Is there any incentive to make a good d..

  Shade in the tax incidence for producers and consumers

The following equations are the market demand and supply schedules before the imposition of a per unit tax. (Qd = quantity demanded, Qs = quantity supplied, P = price) Assume there is an imposition of a $2 per unit tax on producers. Graph the supply ..

  Illustrate what mistakes did policymakers make

Illustrate what mistakes did policymakers make that have kept developing nations from growing more quickly.

  Worth of bonds to the public in an open market operation

If the Bank of Canada sells $100 million worth of bonds to the public in an open market operation, what is the change in quantity of money that will eventually result? Assume that the currency drain is 0.15 and the desired reserve ratio is 0.05, and ..

  Unemployment were attributable to the long-term unemployed

Suppose that over the course of a year 100 people are unemployed for 4 weeks each (the short-term unemployed), while 10 people are unemployed for 52 weeks each (the long-term unemployed). Approximately what percentage of the total spells of unemploym..

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