Question

Furiosa has individual preferences for gasoline (G) and water (W), which can be represented by the...

Furiosa has individual preferences for gasoline (G) and water (W), which can be represented by the following utility function: U(G,W) = 7G4W5 + 31.9

as income increases, does demand for gasoline increase, decrease, or mean constant? Provide evidence!

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Furiosa has individual preferences for gasoline (G) and water (W), which can be represented by the...
Furiosa has individual preferences for gasoline (G) and water (W), which can be represented by the following utility function: U(G,W) = 7G4W5 + 31.9 Furiosas budget line can generally be written as I=pgG+pwW. Find Furiosas demand for gasoline as a function of income and prices. Put another way, what is G*(I,pg,pw)?
An individual has preferences for an aggregate consumption commodity (x) and health (H) represented by a...
An individual has preferences for an aggregate consumption commodity (x) and health (H) represented by a utility function U(x, H) = αln(x) + βln(H). The price of the aggregate commodity (x) is px and the price of medical care (m) is pm. The input of medical care (m) produces health (H) via a health production relationship that can be presented by the function g(m) = ln(m); that is H = ln(m). a. Compute the optimal demand for medical care (m),...
An individual has preferences over housing, x (measured in square metres), and other goods, y, represented...
An individual has preferences over housing, x (measured in square metres), and other goods, y, represented by utility function u(x,y) = x4y. Her disposable income is $75000, and the price of housing is $1000/m2, while that of other goods is py = $1. c) [10 marks] Find the compensating variation (CV) value of this policy’s effect on welfare, and provide an interpretation for it.
Consider an individual who has preferences over Hamburgers (H) and Soda (S) represented by the following...
Consider an individual who has preferences over Hamburgers (H) and Soda (S) represented by the following utility function: U(H,S)=H^0.9 + 3S. The price of a Hamburger is $4 and the price of a Soda is $3. The individual has a budget of B (you don’t know the exact amount). You are given the following marginal utilities: MUH=0.9H^ -0.1, MUS=3. A) Find the demand functions for this individual. B) Characterize what will happen over every feasible size of B (ie. zero...
An agent has preferences for goods X and Y represented by the utility function U(X,Y) =...
An agent has preferences for goods X and Y represented by the utility function U(X,Y) = X +3Y the price of good X is Px= 20, the price of good Y is Py= 40, and her income isI = 400 Choose the quantities of X and Y which, for the given prices and income, maximize her utility.
2. Suppose you can describe your preferences by the utility function U = 2qS0.8qM0.2. (a) Which...
2. Suppose you can describe your preferences by the utility function U = 2qS0.8qM0.2. (a) Which good, ski lift tickets or meals out, provides you with greater marginal utility when you have equal quantities of each? (b) Provide a formula for the slope of any indifference curve (the Marginal Rate of Substitution) between ski lift tickets and meals out. (c) What happens to your Marginal Rate of Substitution as the number of ski lift tickets you purchase increases (i.e., does...
Suppose the preferences of an individual are represented by a quasilinear utility func- tion: U (x,...
Suppose the preferences of an individual are represented by a quasilinear utility func- tion: U (x, y) = 3 ln(x) + 6y (a) Initially, px=1, py=2 and I=101. Then, the price of x increases to 2 (px=2). Cal- culate the changes in the demand for x. What can you say about the substitution and income effects of the change in px on the consumption of x? (Hint: since the change in price is not small, you cannot use the Slutsky...
Gordon’s preferences can be represented by the utility function u(x,z) = 100x + x2/2 + z,...
Gordon’s preferences can be represented by the utility function u(x,z) = 100x + x2/2 + z, where x is his consumption of gin and z denotes the amount of money left over to spend on other stuff. If he has $10,000 to spend on gin and other stuff and if the price of gin rises from $50 to $70 then the change in his consumer surplus is Select one: a. a fall of $1600. b. a fall of $2,800. c....
Karen has preferences over reading books, r and cups of coffee, c, represented by the utility...
Karen has preferences over reading books, r and cups of coffee, c, represented by the utility function u(r, c) = min{r, c} She is endowed with positive amounts of both goods, (ωr, ωc)=(100,100), respectively and faces prices pr, pc. 1. Are the consumer’s preferences convex? Are the consumer’s preferences monotone? Explain your answer graphically. 2. Assume pc = 10 (thus, pr represents the price of books relative to cups of coffee). Solve for the Marshallian demand for books read, r...
George is making a consumption choice over apples (a) and bananas (b). George’s preferences are represented...
George is making a consumption choice over apples (a) and bananas (b). George’s preferences are represented by u (a, b) =(2a^2)b where a > 0 and b > 0. Denote by f = (a, b) a fruit bundle. 1. In terms of preference relations, how does George rank the three bundles f1 = (3, 1), f2 = (1, 3), and f3 = (2, 2) relative to each other? 2. State George’s marginal rate of substitution (MRS) function, MRS(a, b) (where...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT