6. Indifference curves and utility maximization Giberto plays the violin as part of a string trio and advertises booking opportunities using brochures he distributes in bars around the oity. Making one graysale brochure costs$0.02, but adding color increases the cost to$0.08per brochure. Gilberto sets aside a monthly budget of$14,00for creating brochures. The following graph shows three of Gaberto's indifference curves for the number of grayscale and color brochures that he makes. Use the green line (triangle symbol) to plot Giberto's budget constraint. Then, place the black point (alus symbol) on the graph to indicate Giberto's optimal consumption choice given that budget constraint. optimal consumption choice given that budget constraint. 6. Indifference curves and utility maximizationGilberto plays the violin as part of a string trio and advertises booking opportunities using brochures he distributes in bars around the city. Making onegrayscale brochure costs $0.02, but adding color increases the cost to $0.08 per brochure. Gilberto sets aside a monthly budget of $14.00 for creatingbrochures.The following graph shows three of Gilberto's indifference curves for the number of grayscale and color brochures that he makes.Use the green line (triangle symbol) to plot Gilberto's budget constraint. Then, place the black point (plus symbol) on the graph to indicate Gilberto'soptimal consumption choice given that budget constraint.GRAYSCALE BROCHURES100000000070000050030020044Budget ConstraintOptimini

The optimal combination is that combination of two goods that when consumed gives the maximum…

6. Indifference curves and utility maximization Gilberto plays the violin as part of a string trio and advertises booking opportunities using brochures he distributes in bars around the city. Making one grayscale brochure costs $0.02, but adding color increases the cost to $0.08 per brochure. Gilberto sets aside a monthly budget of $14.00 for creating brochures. The following graph shows three of Gilberto's indifference curves for the number of grayscale and color brochures that he makes. Use the green line (triangle symbol) to plot Gilberto's budget constraint. Then, place the black point (plus symbol) on the graph to indicate Gilberto's optimal consumption choice given that budget constraint. GRAYSCALE BROCHURES 1000 000 800 700 500 100 400 300 Budget Constraint Optimum

6. Indifference curves and utility maximization Gilberto plays the violin as part of a string trio and advertises booking opportunities using brochures he distributes in bars around the city. Making one grayscale brochure costs $0.02, but adding color increases the cost to $0.08 per brochure. Gilberto sets aside a monthly budget of $14.00 for creating brochures. The following graph shows three of Gilberto's indifference curves for the number of grayscale and color brochures that he makes. Use the green line (triangle symbol) to plot Gilberto's budget constraint. Then, place the black point (plus symbol) on the graph to indicate Gilberto's optimal consumption choice given that budget constraint. GRAYSCALE BROCHURES 1000 000 800 700 500 100 400 300 Budget Constraint Optimum

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter10: Consumer Choice Theory

Section: Chapter Questions

Problem 9P

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5. Indifference curves and utility maximization Becky plays the cello as part of a string duo and advertises booking opportunities using brochures she distributes in coffee shops around the city. Making one grayscale brochure costs $0.02, but adding color increases the cost to $0.10 per brochure. Becky sets aside a monthly budget of $20.00 for creating brochures. The following graph shows three of Becky's indifference curves for the number of grayscale and color brochures that she makes. Use the green line (triangle symbol) to plot Becky's budget constraint. Then, place the black point (plus symbol) on the graph to indicate Becky's optimal consumption choice given that budget constraint. GRAYSCALE BROCHURES 1000 900 800 700 600 500 400 300 200 100 0 0 25 50 ¹₂ 75 100 125 150 175 200 225 250 COLOR BROCHURES Budget Constraint Optimum ? At the optimum that you indicated on the graph, Becky's marginal rate of substitution is equal to color. in grayscale per brochure in
Alex has $18 per week in his entertainment budget. He splits his time between going to the movies and renting video games. Each movie costs $6 while each video game rental costs $3. The measured total utility of each of his activities is shown in the table below. What is Alex's utility maximizing point? Movies Total Utility Video Game Rentals Total Utility 0 0 0 0 1 40 1 30 2 75 2 55 3 105 3 76 4 130 4 92 5 160 5 106 6 114 7 116 Question 1 options: 2 movies, 2 video game rentals 0 movies, 6 video game rentals 5 movies, 7 video game rentals 1 movie, 4 video game rentals
Ramona is an asparagus farmer and the world asparagus market is perfectly competitive. The market price is $23 a bundle. Ramona sells 800 bundles a week and her marginal cost is $25 a bundle. The market price falls to $20 a bundle, and Ramona cuts her output to 500 bundles a week. Ramona's average variable cost and marginal cost fall to S20 a bundle. Ramona is A. not maximizing profit because she has cut her asparagus production O B. not maximizing profit because she is incurring an economic loss C. maximizing profit and she is incurring an economic loss O D. maximizing profit and she is making an economic profit E. not maximizing profit because marginal revenue does not equal marginal cost
Enrique is a movie buff. He likes to watch on demand movies from his cable company, which cost $5 each, and so likes to go to the local movie house, which charges $15 a ticket. Suppose that given his budget and his tentative spending plans, the marginal utility from a cable movie is 15 utils and the marginal utility of a movie at the local cinema is 45 utils. Assuming he is spending his entire budget, Enrique is currently maximizing his utility Enrique can increase his utility by buying more cable movies and watching fewer cinema movies Enrique can increase his utility by buying more cinema movies and fewer cable movies
Ari intends to purchase a new car and has narrowed it down to a Dodge Ram truck or a Toyota Camry. A Dodge Ram truck costs $55000 while a Toyota Camry costs $20000. The utility that Ari will get from Dodge Ram truck is 12500 while Toyota Camry will generate a utility of 2500. Note: A purchase generating utility tells us the marginal utility of the good. What is the Marginal Utility per Dollar for Dodge Ram truck? What is the Marginal Utility per Dollar for Toyota Camry? Will Ari be better off buying a Dodge Ram truck or a Toyota Camry? ODodge Ram truck OToyota Camry A
Brenda wants to buy new car and has a budget of $25,000. She has just found a magazine that assigns each car an index for styling and an index for gas mileage. Each index runs from 1 to 10, with 10 representing either the most styling or best gas mileage. While looking at the list of cars, Brenda observes that on average, as the style index increases by one unit, the price of the car increases by $6,250. She also observed that as the gas-mileage index rises by one unit, the price of the car increases by $5,000. Illustrate the various combinations of style (S) and gas mileage (G) that Brenda could select with her $25,000 budget. Using the line drawing tool, illustrate Brenda's budget line. Label this line 'Budget Line'. Carefully follow the instructions above, and only draw the required object. Suppose Brenda's preferences are such that she always receives two times as much satisfaction from an extra unit of styling as she does from gas mileage. What type of car will Brenda choose?…
Styles 15. Damian Matthews is busy. He allocates his free time between watching movies and working out at the gym. The table below shows his utility from the number of times per week he watches a movie or goes to the gym. Damien has 14 hours a week to spend on movies or the gym (think of hours like $ of income here). Each movie takes 2 hours. Each gym trip takes 2 hours. Q of Gym Total Q of Movie Total Utility visits Utility from visits from Gym Visits movies 100 1 60 180 110 3 240 3 150 4 280 4 180 310 190 330 195 340 7 197 a) What bundles of gym visits and movies can Damien consume if he spends 1) all his time in the gym or 2) all his time watching movies? b) Calculate the marginal utility of each gym visit'and movie. Then calculate the Marginal Utility per hour of each activity. c) How should he allocate his time to maximize his utility? 12
Praxilla, who lived in ancient Greece, derivesutility from reading poems and from eating cucumbers.Praxilla gets 30 units of marginal utility from her firstpoem, 27 units of marginal utility from her secondpoem, 24 units of marginal utility from her third poem,and so on, with marginal utility declining by three unitsfor each additional poem. Praxilla gets six units ofmarginal utility for each of her first three cucumbersconsumed, five units of marginal utility for each of hernext three cucumbers consumed, four units of marginalutility for each of the following three cucumbersconsumed, and so on, with marginal utility declining byone for every three cucumbers consumed. A poem coststhree bronze coins but a cucumber costs only one bronzecoin. Praxilla has 18 bronze coins. Sketch Praxilla’sbudget set between poems and cucumbers, placingpoems on the vertical axis and cucumbers on thehorizontal axis. Start off with the choice of zero poemsand 18 cucumbers, and calculate the changes in…
1. An individual's budget Suppose Darnell has a weekly budget of $32 to spend on ranch dressing and spinach. Ranch dressing is priced at $4 per bottle, and spinach is priced at $2 per container. If Darnell spends his entire $32 on ranch dressing, he can buy 16 containers of spinach. 8 bottles of ranch dressing. If he spends his entire $32 on spinach, he can buy Use the blue line (circle symbol) to plot Darnell's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the area that represents combinations of ranch dressing and spinach that are affordable for Darnell. Finally, place the black point (plus symbol) on the point on Darnell's budget constraint that corresponds to a scenario in which Darnell spends $16 on each good. Note: Dashed drop lines will automatically extend to both axes.
Max enjoys windsurfing and snorkeling. Max has $35 a day to spend, and he can spend as much time as he likes on his leisure pursuits. The price of renting equipment for windsurfing is $10 an hour and for snorkeling is $5 an hour. The table shows the total utility Max gets from each activity. Total Total Hours utility from utility from per day windsurfing snorkeling 1 120 40 2 220 76 3 300 106 4 360 128 5 396 140 6 412 150 7 422 158 Calculate Max’s marginal utility from windsurfing at each number of hours per day. Does Max’s marginal utility from windsurfing obey the principle of diminishing marginal utility? How many hours does…
The table shows Jerry's total utility from lottery tickets and candy bars. The price of a lottery ticket is $2, the price of a candy bar is $4, and Jerry has $12 a week to spend. Calculate Jerry's marginal utility from the fourth lottery ticket and marginal utility per dollar when he buys 4 lottery tickets. Calculate Jerry's marginal utility from the second candy bar and marginal utility per dollar when he buys 2 candy bars >>> Answer to 1 decimal place. ………… Jerry's marginal utility from the fourth lottery ticket is units. The marginal utility per dollar from lottery tickets when Jerry buys 4 lottery tickets is units per dollar. Jerry's marginal utility from the second candy bar is units. The marginal utility per dollar from candy bars when Jerry buys 2 candy bars is units per dollar. C Lottery tickets Total utility 0 14 24 32 38 Quantity per week 0 1 2 3 4 Quantity per week ܘ ܝ ܚ ܚ ܂ 2 3 Candy bars 4 Total utility 0 100 120 134 144
Joe has $55 to spend on apples and oranges. Given the information in the following table, is Joe maximizing utility? Marginal Utility of Last Unit Product Price $0.50 Apples Oranges $0.75 Quantity 50 lbs. 40 lbs. Joe's marginal utility per dollar spent on apples is Joe's marginal utility per dollar spent on oranges is The total amount of his income Joes spends on apples and oranges is Total Utility 1,000 1,200 units of utility per dollar. units of utility per dollar. dollars. 20 30