Question: Quasimodo consumes earplugs and other things. His utility function for earplugs x and money to spend on other goods y is given by u(x, y)

Quasimodo consumes earplugs and other things. His utility function for earplugs x and money to spend on other goods y is given by u(x, y) = 100x − x2 2 + y.
(a) What kind of utility function does Quasimodo have?
(b) What is his inverse demand curve for earplugs?
(c) If the price of earplugs is $50, how many earplugs will he consume?
(d) If the price of earplugs is $80, how many earplugs will he consume?
(e) Suppose that Quasimodo has $4,000 in total to spend a month. What is his total utility for earplugs and money to spend on other things if the price of earplugs is $50?
(f) What is his total utility for earplugs and other things if the price of earplugs is $80?
(g) Utility decreases by _______ when the price changes from $50 to $80.
(h) What is the change in (net) consumer’s surplus when the price changes from $50 to $80?

Step by Step Solution

★★★★★

3.43 Rating (162 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a Quasilinear b p 100 x c ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

649-B-E-D-S (1026).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

Jake likes parties and he likes to drink beer. He knows that if he drinks too much beer he will not feel well the next day and wont be able to get any work done. When Jake is at home, soberly...

Tom and Jerry are roommates. They spend a total of 80 hours a week together in their room. Tom likes loud music, even when he sleeps. His utility function is UT (CT,M) = CT + M, where CT is the...

Fred has just arrived at college and is trying to figure out how to supplement the meager checks that he gets from home. How can anyone live on $50 a week for spending money? he asks. But he asks to...

1. If Peregrine consumes (1, 400, 1, 210) and earns (900, 1, 760) and if the interest rate is 10%, the present value of his endowment is a. $2,660. b. $2,500. c. $2,610. d. $5,250. e. $6,150. 2. If...

man2 Exercise #1. Annas preferences over consumption bundles (x1,x2) are summarized by the utility function U (x1,x2) = x1 (x2 + 1)2. (a) Derive an algebraic expression for the marginal utility MU1...

give all Problem 1. Demand Bengt's utility function is U(x1, x2)= x1 + ln x2 x1 - stamps x2 - beer Bengts budget p1 x1 + p2 x2 = m p1 - price of stamps p2 - price of beer m - Bengt's budget a) What...

This is my assignment The questions in this problem refer to the following game: Player 2 a. Determine if either player has any dominated strategies. If so. identify them. b. Does either player have...

Please answer all the required questions in detail I hope the answer is not copy-paste I hope that the answer will be according to the concepts in the chapter 3 The following article summarizes the...

Analyze following attachments and provide solutions. : ____24.El Nio wind patterns affected the weather across the United States during the winter of 1997-1998. Suppose the demand for home heating...

Hello may you help me solve these SP10.1 Price discrimination Valair is an airline flying a particular route that has seasonal demand. The firm's total demand is given by: Q = 600 - 4P (10.5) where Q...

From a set of n randomly chosen people, let Eij denote the event that persons i and j have the same birthday. Assume that each person is equally likely to have any of the 365 days of the year as his...

a) Explain the term Corporate Governance from a banking industry perspective. b) Explain three determinants of weak corporate governance that could lead to the insolvency of banks in Africa. c)...

A firm has reported the financial information shown below. What was the book value of stockholders' equity? Cash $ 240 Sales 7,260 Inventory 780 Depreciation Expense 260 Cost of goods sold 1,250...

Since we cannot observe demand curves, there is little need for the marketing manager to be acquainted with economic concepts. Critically appraise this statement. (I.M.)

Answer question 5 using two specific production functions as examples: a. A fixed-proportions production function b. A Cobb-Douglas production function of the form q = (K ( L.

Universal Gizmo (UG) operates a large number of plants that produce gizmos using a special technology. Each plant produces exactly 100 gizmos per day using 5 gizmo presses and 15 workers. Explain why...

Continuing the prior question, suppose that Universal Gizmo devises a new plant design that uses 15 gizmo presses and 5 workers also to produce 100 gizmos per day. How would you construct an isoquant...

The Green Giant has a 5 percent profit margin and a 3 9 percent dividend payout ratio. The total asset turnover is 1 . 1 times and the equity multi times. What is the sustainable rate of growth?...

Par Two: 4 questions ((Please round up your answer to the nearest two decimals) 1. (20 points) : Your credit card's annual interest rate is 24 pereent and your credit card begins the billing cycle on...

Your firm is contemplating the purchase of a new $773,500 computer-based order entry system. The system will be depreciated straight-line to zero over its sevn-year life. It will be worth $53,000 at...