Suppose that the utility function of an enterprise consumer for coal (C) and natural gas (G)...
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Suppose that the utility function of an enterprise consumer for coal (C) and natural gas (G) is given by U(C,G) = a In(C) + (1 - a) In (G) where 0 < a < 1. Suppose the prices of coal and gas are $2 and $4 respectively and the enterprise consumer has a yearly energy budget of $100000. Suppose in addition that the government has chosen to ration coal because of climate concerns by allowing a maximum consumption of 25000 units (C≤25000). If a = 0.2, find the optimal consumption bundle of coal and gas. Does the coal rationing constraint influence consumer's choice and utility, and if so, how much? b. a. If a = 0.8, find the optimal consumption bundle. Does coal rationing constraint influence consumer's choice and utility, and if so, how much? Suppose that the utility function of an enterprise consumer for coal (C) and natural gas (G) is given by U(C,G) = a In(C) + (1 - a) In (G) where 0 < a < 1. Suppose the prices of coal and gas are $2 and $4 respectively and the enterprise consumer has a yearly energy budget of $100000. Suppose in addition that the government has chosen to ration coal because of climate concerns by allowing a maximum consumption of 25000 units (C≤25000). If a = 0.2, find the optimal consumption bundle of coal and gas. Does the coal rationing constraint influence consumer's choice and utility, and if so, how much? b. a. If a = 0.8, find the optimal consumption bundle. Does coal rationing constraint influence consumer's choice and utility, and if so, how much?
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a If a 02 then the optimal consumption bundle of coal and gas is C 25000 G 8333333 The co... View the full answer
Related Book For
Federal Tax Research
ISBN: 9781285439396
10th edition
Authors: Roby Sawyers, William Raabe, Gerald Whittenburg, Steven Gill
Posted Date:
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