Write a utility function for consumer

Assignment Help Business Economics
Reference no: EM131000861

1) Suppose that a consumer has a choice between gallon jugs of milk and half gallon jugs of milk. The consumer only cares about how much milk she consumes and not about the size of the jugs of milk.

a. Write a utility function for this consumer.

b. Suppose the price of the half gallon jug of milk is $2, the price of a gallon jug of milk is $5, and the consumer has only $10 dollars to spend on milk. Set up a Lagrangian and set up the first order conditions for the maximization problem.

c. Is there a solution to the first order conditions? If so,solve for the opitmal quantities of gallon jugs and half gallon jugs. If not, what is a solution to the maximization problem?

Reference no: EM131000861

Questions Cloud

Marginal utility for cups of coffee is constant : Suppose that Omar’s marginal utility for cups of coffee is constant at 3.5 utile per cup no matter how many cups he drinks. On the other hand, his marginal utility per doughnut is 10 for the first doughnut he eats, 9 for the second he eats, 8 for the..
What is the impact of this policy on the market quantity : Suppose the supply of coal is perfectly inelastic, and the price elasticity of demand for coal is -0.4. If the government imposes a binding price ceiling for coal at a price that is 20 percent below the market equilibrium price, what is the impact of..
Price of product and quantity of the product demanded : Which of the following established the inverse relationship between the price of a product and the quantity of the product demanded?
Will the household be better or worse off under new program : Suppose that the average household in a state consumes 800 gallons of gasoline per year. A 20-cent gasoline tax is introduced, coupled with a $160 annual tax rebate per household. Will the household be better or worse off under the new program?
Write a utility function for consumer : Suppose that a consumer has a choice between gallon jugs of milk and half gallon jugs of milk. The consumer only cares about how much milk she consumes and not about the size of the jugs of milk. Write a utility function for this consumer. Is there a..
Shifting the wheat supply curve to the right : Between 1950 and 2006, the price of wheat fell dramatically from $15.81 per bushel to $3.40 per bushel. Suppose b/w 1950 and 2006, the supply of wheat increased substantially due to increases in productivity, shifting the wheat supply curve to the ri..
Describe partnership contributions and distributions : Describe partnership contributions and distributions. Please include information on the taxability of partnership contributions and distributions and how the IRS has created various elections to counterbalance or minimize the uneven effects of certai..
What would be the percentage increase in the quantity : Suppose that legalizing the use of marjuana would decrease its price by 93%. If the price elasticity of demand for marjuana is -2.00, what would be the percentage increase in the quantity of marijuana demanded from legalizing marijuana? _______ perce..
At what price will demand fall to zero : where, q is the quantity demanded at price p when the person’s income is I. Assume initially that the person’s income is $40,000. Show work & calculations. At what price will demand fall to zero? If the market price for gizmos is $10, how many will b..

Reviews

Write a Review

Business Economics Questions & Answers

  How much in revenues do businesses receive in the product

Suppose that business buy a total of $120 billion of the four resources (labor, land, capital, and entrepreneurial ability) from households. how much in revenues do businesses receive in the product market?

  Semiconductor manufacturing involves taking a flat disc

Semiconductor manufacturing involves taking a flat disc of silicon, called a wafer, and depositing many layers of material on top of it. Each layer has a pattern on it that, upon completion, defines the electrical circuits of the finished microproces..

  Potential value-expected that next-period GDP

The GDP is $40 billion below its potential value. It is expected that next-period GDP will be $20 billion below potential and that two periods from now it will be back at its potential level. The multiplier for government spending is 2. What is the b..

  Elucidate how these tendencies lead to religion becoming

Elucidate how these tendencies lead to religion becoming evil, how does Kimball respond to them and how the Greek Orthodox tradition transcends them.

  Case rules for producing at least cost and maximizing profit

For a given firm the MRPL = $50, and the MRPK = $100, while the PL = $10 and the PK = $20. What are the general case rules for producing at least cost and maximizing profits? Is the above firm maximizing profits? Why or why not? What (if anything) ca..

  Calculate the equilibrium price level

Suppose that initially the money supply is 2 trillion the price level equals 2 the real gdp is 4 trillion in base year dollars and income velocity of money is 4 . Then suppose that the quantity of money in circulation remain fixed but the income velo..

  Describe a positive or negative situation arising

Describe a positive or negative situation arising from an organization structure within an internationalcompany. Explain why a good organization structure is important to companies.

  Determine the projects after-tax net present worth

A corporate expects to receive $34,688 each year for 15 years if a particular project is undertaken. There will be an initial investment of $122,261. The expenses associated with the project are expected to be $7,426 per year. Assume straight-line de..

  When economists speak of marginal they mean

When economists speak of "marginal," they mean. Managers undertake an investment only if. A manager of a clothing firm is deciding whether to add another factory in addition to one already in production. The manager would compare. If a firm's average..

  What is the initial effect of this change on inventories

Draw a Keynesian cross graph and assume that macro economy starts and ends at equilibrium. Label the initial aggregate demand line AD0, Then show what happens in the diagram when a rise in consumer wealth raises C in your diagram. What is the initial..

  Why would nations favor fixed vs. floating exchange rates

Why would nations favor fixed vs. floating exchange rates for their currencies? Why do some developing nations have a “fear of the float?

  Consumer expenditures-gross investment

GDP in an economy is $3205 billion. Consumer expenditures are $2417 billion, government purchases are $543 billion, and gross investment is $303 billion. Net exports are:

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