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The demand function for widgets is given by D(P) = 16 - 2P. Compute the change in consumer surplus when the price of a widget increases from $1 to $3.
Illustrate graphically the change in consumer surplus when the price of x increases from $1 to $2. 5.
Calculate his income and substitution effects of a decrease in the price of food to $3. Calculate the compensating variation of the price change.
Derive the equation representing Carina's demand for food, and draw this demand curve for prices of food ranging between 1 and 6.
Karl's preferences over hamburgers and beer are described by utility function. Derive Karl's demand curve for beer as a function of the exogenous variables.
The assignment is similar to last time: read the article and explain the social and economic significance of this article.
What is set of baskets Darrell may purchase if his behavior is consistent with utility maximization? What baskets might he purchase if Plan B is better for him?
Samantha purchases food (F ) and other goods (Y ) with the utility function U = FY. How many units of food does she consume when she maximizes utility?
Using revealed preference analysis (without drawing indifference curves), what can you say about how Sally's ranks her initial and later baskets?
How much would she have needed to give him in cash to make him just as well off as with the gift certificate?
Will Joe be better off or worse off after the price increase and cash transfer than he was before? What will happen to his gasoline consumption?
If the new proposal is adopted, how will the student's consumption pattern (in particular, the amount of root beer consumed) and welfare be affected?
When he maximizes utility subject to his budget constraint, he purchases 5 units of y. What must be the price of y and the amount of x consumed?
On the graph you drew in part (a), draw a set of indifference curves that illustrates why Toni may be better off with the frequent flyer program.
After the prices change, can you predict whether Julie's utility will be higher, lower, or the same as under the initial prices?
Draw several of Dr. Strangetaste's indifference curves, including one that is tangent to his budget line.
Helen's preferences over CDs (C) and sandwiches (S) are given by U(S, C) = SC + 10(S + C), with MUC =S + 10. Find Helen's optimal consumption basket.
Dave currently consumes 10 hot dogs and 6 sodas each week. If not, how should he reallocate his spending in order to increase his utility?
Currently, he also consumes 15 hamburgers per week, and his marginal utility of a hamburger is 8. Is Ray maximizing utility at his current consumption basket?
If so, show why. If not, should she buy fewer hamburgers and more milkshakes, or the reverse?
The prices of the two goods are Px = $5 and Py = $10, and the consumer's income is $220. Determine the optimum consumption basket.
Ann is currently spending all of her income. She is buying 8 units of food. How many units of clothing is she consuming?
What is the marginal rate of substitution of food for clothing at her optimal basket? Show this graphically and algebraically.
What is the expression for Sarah's budget constraint? Show graphically how Sarah's budget line changes if the price of oranges decreases to $0.25.
What is the expression for Pedro's budget constraint? What is the maximum number of square feet of housing he can purchase given his monthly stipend?