Utility and consumer surplus, Microeconomics

Assignment Help:

Jeremy is an economics student who loves hamburgers. He could eat any number of them for dinner, but he gets a really bad stomach ache after eating a certain amount. In fact, his utility function for hamburgers is given by:

U(q) =10q = q2/2

where q is the number of hamburgers he eats for dinner (with q ≥ 0).

(a) How many hamburgers can Jeremy eat before he gets a stomach ache (that is, before his utility becomes negative)?

(b) Calculate the optimal number of hamburgers that Jeremy can eat as a function of p, the price per hamburger. (Hint: You have to maximize Jeremy's "net utility". That is, his utility minus the amount he spends on hamburgers.)

(c) Derive Jeremy's inverse demand for hamburgers.

(d) Compute Jeremy's consumer surplus as a function of p.

(e) Show that Jeremy's net utility as a function of p coincides with his consumer surplus

 


Related Discussions:- Utility and consumer surplus

Economic model and assumptions, what is economic model and role of assumpti...

what is economic model and role of assumptions in it.

What is cost effectiveness analysis, Q. What is Cost effectiveness analysis...

Q. What is Cost effectiveness analysis? Cost effectiveness analysis A method which seeks to identify the least cost option for meeting a particular objective. It actives prior

Secondhand smoke globally kills more than 600, Secondhand smoke globally ki...

Secondhand smoke globally kills more than 600,000 people each year, accounting for 1 percent of all deaths worldwide, according to a new study. . . . Researchers estimated th

What is the difference between economics and business, What is the differen...

What is the difference between economics and business?  Economics is the study of how we, the people, engage ourselves in production, distribution and consumption of goods and

Manpower-population ratios, Manpower-Population Ratios In this techniq...

Manpower-Population Ratios In this technique, manpower will not be planned for the economy as a whole. It will be planned for sectors or sub-sectors of an economy. For instanc

Explain term Markets , A market is nothing more or less than the locus of e...

A market is nothing more or less than the locus of exchange, it is not of necessity a place, but easily buyers and sellers coming together for transactions.   Transactions happen

Distribution of income, Q. Distribution of income? Distribution:Distrib...

Q. Distribution of income? Distribution:Distribution of income reflects the process by which real output of services and goods produced by the economy is allocated to different

What is tradeable product, Q. What is Tradeable product? Tradeable:A pr...

Q. What is Tradeable product? Tradeable:A product (a service or good) is tradeable if its purchaser can purchase it far away from the place where it is produced. Most goods (ot

Microeconomic theory homework, In this section, we ask you to write down a ...

In this section, we ask you to write down a simple, formal, mathematical model. A small number of points will be awarded for an intuitive discussion of the problem, but most of the

Write Your Message!

Captcha
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