Ben has a quasilinear utility function U(q, 92) = 6q1.5 + 9 and a budget constraint...
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Ben has a quasilinear utility function U(q₁, 92) = 6q1.5 + 9₂ and a budget constraint Y = P191 + P292. a. b. C. d. What is Ben's optimal q₁ and q2? What can we say about the two quantities? Explain. If P₁ = = P2, how much income does Ben need for his optimal choice? Explain. Using your answer in (b) and a diagram, explain the concept of revealed preference. Suppose that Ben's budget constraint is now non-linear. Using a diagram and your own example, explain one reason that his budget constraint is non-linear and whether Ben is worse off. Ben has a quasilinear utility function U(q₁, 92) = 6q1.5 + 9₂ and a budget constraint Y = P191 + P292. a. b. C. d. What is Ben's optimal q₁ and q2? What can we say about the two quantities? Explain. If P₁ = = P2, how much income does Ben need for his optimal choice? Explain. Using your answer in (b) and a diagram, explain the concept of revealed preference. Suppose that Ben's budget constraint is now non-linear. Using a diagram and your own example, explain one reason that his budget constraint is non-linear and whether Ben is worse off.
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Related Book For
Elementary Statistics Picturing the World
ISBN: 978-0321911216
6th edition
Authors: Ron Larson, Betsy Farber
Posted Date:
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