Adam consumes apples (a) and bananas (b) for his regular intake of vitamins. His preferences can be represented by the utility function U=ab The price of a banana is 1 euro and the price of an apples is 40 cents. Adam’s weekly budget for the fruits is 12 euro.
Added by Gregg M.
Step 1
40 euros - Weekly budget (\( B \)) = 12 euros Show more…
Show all steps
Your feedback will help us improve your experience
Supratim Pal and 60 other Microeconomics educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Key Concepts
Recommended Videos
Andy purchases only two goods, apples (a) and kumquats $(k) .$ He has an income of $\$ 40$ and can buy apples at $\$ 2$ per pound and kumquats at $\$ 4$ per pound. His utility function is $U(a, k)=3 a+5 k$ That is, his (constant) marginal utility for apples is 3 and his marginal utility for kumquats is $5 .$ What bundle of apples and kumquats should he purchase to maximize his utility? Why? A
Consumer Choice
Constrained Consumer Choice
Andy purchases only two goods, apples $(a)$ and kumquats $(k)$. He has an income of $\$ 100$ and can buy apples at $\$ 2$ per pound and kumquats at $\$ 10$ per pound. His utility function is $U(a, k)=6 a+5 k$ That is, his (constant) marginal utility for apples is 6 and his marginal utility for kumquats is $5 .$ What bundle of apples and kumquats should he purchase to maximize his utility? Why? A
1. Consider a consumer spending his weekly budget on two goods, apples (A) and bananas (B). The price of apples is $4 per pound and the price of bananas is $5 per pound. Consumer's budget is $100 per week. (a) an equation describing the consumer's budget line and (b) describe it on a diagram measuring apples (A) on the horizontal axis. (Part A) 2. Continuing from the previous question, suppose the consumer has the following utility function: (𝑈(𝐴,𝐵)=𝐴+𝐵) . Draw his indifference map on a diagram measuring apples (A) on the horizontal axis. (Part B) 3. Continuing from the previous two questions, how many pounds of bananas does the consumer purchase? Please write the value (number) only. No unit is required (no need to write "pounds" at the end). If your answer is a decimal number , then please round it at one decimal place (Part C)
Andrew D.
Recommended Textbooks
Principles of Economics
Principles of Microeconomics for AP® Courses
Economics
Transcript
Watch the video solution with this free unlock.
EMAIL
PASSWORD