What is the maximum amount of buddz that ajax can afford

Assignment Help Macroeconomics

Reference no: EM131427189

Consumer Choice and Utility

Purpose: This assignment demonstrates how "rational" consumer make choices that lead to the demand for goods and services. The key concepts are utility, diminishing marginal utility, and the consumer's budget.

Your name:__________________________

Your student number: ____________________

Your new number is:___________________

A =______5___ B=___3_______ C=____8______ D=____1_________

1. What is your student number?

2. What is your A?

3. What is your B?

4. What is your C?

5. What is your D?

Consider a consumer named Ajax with a budget of $100 dollars. The consumer has to spend all of his/her budget on "Buddz" or "Drankz". Buddz have a price of $10+$B per gram and Drankz have a price of $10 per litre.

For your budget line, put the number of Drankz on the horizontal axis.

6. What is the maximum amount of Buddz that Ajax can afford?

7. What is the maximum amount of Drankz that Ajax can afford?

8. If Ajax spends half of his budget on each item, how many Buddz will he buy?

9. What is the slope of Ajax's budget line?

For the next two questions, identify a combination of Drankz and Buddz that is unaffordable for Ajax and report its address (Drankz, Buddz), below.

10. Number of unaffordable Drankz:

11. Number of unaffordable Buddz:

12. How much does your "unaffordable bundle cost"?

13. Suppose Ajax's income doubles, what is the slope of his new budget line?

14. Suppose Ajax's income is falls to half of the original budget, what is the slope of his new budget line?

15. Suppose (for this question ONLY) the price of Buddz changes to $10+$D, what it the slope of the new budget line?

Table 1 - Ajax's Utility: U = D^0.5 * B^0.5

Buddz
10	0.00	3.16	4.47	5.48	6.32	7.07	7.75	8.37	8.94	9.49	10.00
9	0.00	3.00	4.24	5.20	6.00	6.71	7.35	7.94	8.49	9.00	9.49
8	0.00	2.83	4.00	4.90	5.66	6.32	6.93	7.48	8.00	8.49	8.94
7	0.00	2.65	3.74	4.58	5.29	5.92	6.48	7.00	7.48	7.94	8.37
6	0.00	2.45	3.46	4.24	4.90	5.48	6.00	6.48	6.93	7.35	7.75
5	0.00	2.24	3.16	3.87	4.47	5.00	5.48	5.92	6.32	6.71	7.07
4	0.00	2.00	2.83	3.46	4.00	4.47	4.90	5.29	5.66	6.00	6.32
3	0.00	1.73	2.45	3.00	3.46	3.87	4.24	4.58	4.90	5.20	5.48
2	0.00	1.41	2.00	2.45	2.83	3.16	3.46	3.74	4.00	4.24	4.47
1	0.00	1.00	1.41	1.73	2.00	2.24	2.45	2.65	2.83	3.00	3.16
0	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Drankz	0	1	2	3	4	5	6	7	8	9	10

List two combinations of Buddz and Dranks that are on the indifference curve U = 6.00 from Table 1 (above).

Combination 1: The combination with the most Drankz?

16. U = 6.00 number of Buddz?

17. U = 6.00 number of Drankz?

Combination 2: The combination with the least Drankz?

18. U=6.00 number of Buddz?

19. U=6.00 number of Drankz?

Suppose Ajax is at the combination (6, 6).

20. What is the marginal utility from getting one more Buddz?

21. What is the marginal utility from getting one more Drankz? What is Ajax's utility maximizing consumption bundle?

22. Umax number of Buddz?

23. Umax number of Drankz?

24. What is Ajax's utility level at his optimal consumption bundle?

Suppose the price of Buddz increases by 20% (for this question ONLY), what is his new optimal consumption bundle?

25. Umax number of Buddz?

26. Umax number of Drankz?

27. What is Ajax's new maximum utility level?

Ajax has a friend Clyde, Clyde has the same budget and faces the prices. Clyde's utility is U = D^(Ax10)% ∗ B^(1-(Ax10%)).

28. Umax number of Buddz?

29. Umax number of Drankz?

30. What is Ajax's new maximum utility level?

Reference no: EM131427189

Questions Cloud

Floor moving computers between work areas : A technician has raised concern over employees on the manufacturing floor moving computers between work areas. The technician is concerned that the activity is making it more difficult to track down rogue devices on the network and provide timely ..

What is wrong with given statement : The margin of error is slightly less than half an hour. To reduce this to 15 minutes, Cary says that the sample size needs to be doubled to 202. What is wrong with this statement?

Discuss the differences in the industries : FIN 571- Discuss the differences in the industries. Discuss the different measurement conventions and how this affects presentations. Contrast IASB basis for accounting (IFRS) and FASB/GAAP accounting.

Project team responsible for new extranet application : A security architect is supporting a project team responsible for a new extranet application. As part of its activities, the team is identifying roles within the system and documenting possible conflicts between roles that could lead to collusion ..

What is the maximum amount of buddz that ajax can afford : Consider a consumer named Ajax with a budget of $100 dollars. The consumer has to spend all of his/her budget on "Buddz" or "Drankz". Buddz have a price of $10+$B per gram and Drankz have a price of $10 per litre. What is the maximum amount of Bud..

Would your margin of error be greater than or equal to : If you wanted 99% confidence for the same study, would your margin of error be greater than, equal to, or less than 0.055? Explain your answer.

Issue of tax today : - What are the current policies at the Federal level? - What are differences between federal policies and state policies? - How important is this issue to Americans overall?

Discuss the factors responsible for wage difference : List and discuss the factors responsible for wage difference in various occupations with examples

Analyze effects teams decisions had on sncs working capital : FIN 571- Explain why those decisions were made. Analyze the effects the team's decisions had on SNC's working capital. Select one plan from the team's results to propose as the best option for SNC.

User Account

All Pages