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?