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Q1. You have $2000 to spend on entertainment this year. The price of a day trip (T) is $40 and the price of pizza and a movie (M) is $ 20. Suppose that your utility function is T1/3 and M2/3. (a) What combination of T and M will you choose? (b) Suppose that the price of day trip rises to $80. How will this change your decision making?
Q2. Consider the following regression model:1/yi = b1+b2(1/xi)+ui(a) Is this a linear regression model?(b) How would you estimate this model?(c) What will be the behaviour of Y as X tends to infinity(d) Give an example where such a model will be appropriate
The case study of the Fisher-Price Toys, Inc., a popular case in basic economics and management from the prestigious Harvard Business School.
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This document contains various important questions and their appropriate answers in the subject field of Economics.
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