Find that optimal amount

Assignment Help Microeconomics
Reference no: EM13119168

1. Suppose that an individual has a utility function U(c, h) = ln(c) + h(crepresents consumption of a necessity good such as shelter, and h represents health).

a. Find that optimal amount of c and h if the individuals income is 5, the price of c is 1 and the price of h is 1.

b. What happens to the consumption of c and h if the individuals income increases to 10. Is health a normal or inferior good, or neither? What about c?

c. Suppose the price of c increases to 2, while income remains constant at 10. What happens to the consumption of c and h? Are c and h substitute goods, complementary goods, or neither?

Questions Cloud

 Find the theoretical probability of undesirable side effects : The theoretical probability of undesirable side effects resulting from taking Grebex is 1 in 12. If 600 people take Grebex to lower their blood pressure, how many will encounter undesirable side effects? Determine the molality of the solution : An sulphuric acid solution has a concentration 3.75 M and a density of 1.230 g/cm3. Determine the molality of the solution. Evidence that population mean weight of hats is greater : A sample of 350 hats is selected and the sample mean is 3.25 pounds. Using a level of significance of .10, is there evidence that the population mean weight of the hats is greater than 3.5 pounds? Fully explain your answer. Determining annuities and sinking funds : Carolyn Ellis is setting up an annuity for her retirement. She can set aside \$2,000 at the end of each year for the next 20 years and it will earn 6% annual interest. Find that optimal amount : Suppose the price of c increases to 2, while income remains constant and what happens to the consumption of c and h? Are c and h substitute goods, complementary goods, or neither? What should be maximum speed of the car so it can round : Suppose the highway is icy and the coefficient of friction between the tires and pavement is only one-third what you found in part A. What should be maximum speed of the car so it can round the curve safely? How much hcl gas can be produced : How much HCl gas can be produced at STP by reacting 198 g of NaCl with excess H2SO4?NaCl + H2SO4 ! NaHSO4 + HCl. Determining rational exponents : Using this model, find the percentage of participation that can be expected if \$5million is spent on this recycling project? Set up an equation and solve algebraically. Round to the nearest whole percent. Find complementary events : Complementary events. A pair of fair dice is rolled. Let E denote the event that the number landing uppermost on the first die is a 3, and let F denote the event that the sum of the numbers landing uppermost is 6. Determine whether E and F are ind..

Write a Review

Determining change in equilibrium output

Assume the economy starts at equilibrium and the mpc=.8. What would be the effect of the \$500 increase in taxes (once all the rounds of the mulyiplier process are complete) in relation to equilibrium output?

Why does wal-mart have a cost advantage

When Wal-Mart locates in a smaller town, often the local retailers (e.g., hardware, clothing, and appliance stores) are unable to successfully compete and are driven out of business.

Discuss the direction of change

Name some areas of business in the United States where the prevailing market structures have changed dramatically in last 20-years and discuss the direction of change

Imperfect competitive market

In the imperfect competitive market of jeans, Lean Jeans, Inc., recently offered rebates of \$1 off the regular \$50 price. Quantity sold jumped 4 more jeans from the previous 100 figure the previous month.

Determining optimal production level

What is the Marginal Cost? What is the Average Cost? What is the optimal production level where production costs are the lowest per unit?

Determine the firm output and price

Under patent protection, a company has a monopoly in the production of a high tech component. Market demand is estimated to be: P = 100 - 0.2Q.

What is the short-run profit-maximizing policy

What is the short-run profit-maximizing policy of a monopolistically competitive firm and how is the long-run equilibrium of monopolistic competition like that of perfect competition? also give example.

Suppose you suddenly realize that your demand estimates might have some uncertainty in them. How might you change value of surplus you give to the customers because of this?

Demand-supply explanations of recent price change

Name any good or service which has a noticeable recent price change. Using concepts of supply and/or demand, what are some possible explanations for this change in price?

What is the incidence of the tax on consumer

how does charging the monopoly optimum and the welfare of consumers, the monopoly, and society?

Economic interplay-airline industry

Discuss how the interplay between economies of density and the properties of hub-and-spoke networks give rise to economies of scope.

Estimate an index model running regression

Think the single-index model. The alpha of a stock is 0 percent. The expected return on the market is 12 percent. The risk-free rate of return is 6 percent.