Question

Suppose that Bridget and Erin spend their incomes on two goods, food (F) and clothing (C). Bridget’s preferences are represented by the utility function U(F,C)=10FC, while Erin’s preferences are represented by the utility function U(F,C) = 20 * F . Food price is $10 per 2 * C 2 unit and Clothing price is $15 per unit. Income is $1000 for both of them.

a) Find optimal choices of food and clothing for Erin and Bridget. No need to draw a curve.

b) From optimal choice, imagine Erin and Bridget have to decrease consumption of clothing. Who would be more upset? In other words, who would be giving up more in terms of utility? Remember, income is still constant.

Answer #1

Julie has preferences for food, f, and clothing, c, described by
a Cobb-Douglas utility function u(f, c) = f · c. Her marginal
utilities are MUf = c and MUc = f. Suppose that food costs $1 a
unit and that clothing costs $2 a unit. Julie has $12 to spend on
food and clothing.
a. Sketch Julie’s indifference curves corresponding to utility
levels U¯ = 12, U¯ = 18, and U¯ = 24. Using the graph (no algebra
yet!),...

Complete the parts below:
A consumer purchases two goods, food (F) and clothing (C). Her
utility function is given by U(F,C)=FC+F. The marginal utilities
are MUF=C+1 and MUC=F. The price of food is
PF, the price of clothing is PC, and the
consumer’s income is W.
Suppose W=10. What is the demand curve for clothing?
The demand for clothing is C=(10-Pc)/2Pc
The demand for clothing depends on both prices
It’s a downward sloping straight line
The demand for clothing is...

Let U (F, C) = F C represent the consumer's utility function,
where F represents food and C represents clothing. Suppose the
consumer has income (M) of $1,200 , the price of food (PF) is $10
per unit, and the price of clothing (PC) is $20 per unit. Based on
this information, her optimal (or utility maximizing) consumption
bundle is:

A consumer purchases two goods, food (F) and clothing (C). Her
utility function is given by U(F,C)=FC+F. The marginal utilities
are MUF=C+1 and MUC=F. The price of food is PF, the price of
clothing is PC, and the consumer’s income is W. Suppose W=10, PF=4,
PC=6. What is the optimal bundle?
Group of answer choices
(F,C)=(1/3,1)
(F,C)=(2,1)
(F,C)=(2,1/3)
(F,C)=(1,3)

Julio receives utility from consuming food (F) and clothing
(C) as given by the utility function U (F,C) = FC. In addition,
the price of food is $2per unit, the price of clothing is $6 per
unit, and Julio's weekly income is $50.
Suppose instead that Julio is consuming a bundle with more food
and less clothing than his utility maximizing bundle. Would this
marginal rate of substitution of food for clothing be greater than
or less than your answer...

(a) If a person's preferences could be represented by the
utility func- tion u(F,C) = FC2 where F is her food
consumption and C her clothing consumption, and if the price of
food were 1, and her income was 60, what would be the equivalent
variation (EV) to a fall in the price of clothing from 2 to 1/2?
(b) What if the utility is U = min[C, F]?

Ann and Ben are two students who spend their money on food (?)
and clothing (?). Ann’s preferences are represented by the utility
function ?(?,?) = 10?? while Ben’s preferences are represented by
the utility function ?(?, ?) = （1／5 ）? 2? 2
.
a. Write down the equation for Ann’s indifference curve that
passes through the bundle (10,5). If she is consuming 5 units of ?,
what is the amount of ? that gives her the same utility as...

1. Suppose utility for a consumer over food(x) and clothing(y)
is represented by u(x,y) = 915xy. Find the optimal values of x and
y as a function of the prices px and py with an income level m. px
and py are the prices of good x and y respectively.
2. Consider a utility function that represents preferences:
u(x,y) = min{80x,40y} Find the optimal values of x and y as a
function of the prices px and py with an...

Peter consumes two goods, food (F) and clothes (C). His utility
function is given by U (F, C) =FC^2. The price for one unit of food
is pF = 1€, while the price for one unit of clothes is pC = 0.5€
and Peter’s income is 120€.
A) Which market basket maximizes Peter’s utility under the
budget constraint?
B) Derive Peter’s individual demand curve of clothes.
C) How does Peter’s budget constraint change if the price of
clothes increases to...

Suppose you only consume two goods food (f) and water (w). Both
cost $1. At your current income, you spend some money on food and
some on water. You find an extra $20. How much of it do you spend
on food if your utility function is given by :
A) U(w,f)= 6(√w) + f
B) U(w,f) = min(2w, 3f)

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