Question

# 1) The following table gives the total utility Cletis would receive from 3 goods. Units 0...

1) The following table gives the total utility Cletis would receive from 3 goods.

 Units 0 1 2 3 4 5 6 7 8 Cowboy Boots 0 100 180 240 290 330 350 360 365 Cowboy Hats 0 50 90 120 140 155 165 170 174 Rope 0 30 55 75 90 100 108 113 117

Assume the price of cowboy boots is \$100, the price of a cowboy hat is \$50, and the price of rope is \$25. If Cletis has \$550 to spend, what is his utility maximizing bundle?

a 5 pair of boots, 1 hat

b 2 pair of boots, 5 hats, 4 rope

c 4 pair of boots, 2 hats, 2 rope

d 3 pair of boots, 3 hats, 4 rope

e 1 pair of boots, 8 hats, 2 rope

2)

Which of the following demand curves is likely the most elastic?

a Chris Hendrixson’s demand for Domino’s Pizza

b Bill Gates’ demand for Pizza

c Chris Hendrixson’s demand for Pizza

d Bill Gates’ demand for Domino’s Pizza

1 ) E

1 pair of boots

8 hats

2 ropee.

Cletis would maximize his utility where is consumption is maximum and he spends all of his in income.

Show the bundle given in option fulfill the above condition where he spends all of his income and get the some quantity of all the goods.

1*100=100

8*50=400

2*25=50

Sum of all this 3 is 550.

2)A

Crix handrisons demand curve for dominos Pizza.

Explanation:

The demand curve of Bill gates is inelastic in the case of both the pizzas.

Because Pizza constitutes a very small even negligible part of his income. Show the demand curve of Bill gates is completely inelastic.

On the other hand, as the pizza of dominos comes under the luxury, the demand for food this is elastic for a normal person.

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