Author Question: Blutarsky is throwing a party at his Fraternity and is trying to choose what booze to buy. A bottle ... (Read 61 times)

Sufayan.ah · **on:** Jul 1, 2018

Blutarsky is throwing a party at his Fraternity and is trying to choose what booze to buy. A bottle of vodka has four times the alcohol as a six-pack of beer.

If Blutarsky only cares about the total amount of alcohol in his basket, what is his marginal rate of substitution of bottles of vodka for six-packs of beer? Devise a utility function to represent these preferences.

Question 2

Which of the following is most likely the most beneficial form of monopoly advantage?

A) better production methods
B) input hoarding
C) decreasing returns to scale
D) government protection

Jmfn03 · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

Blutarsky is willing to trade 1 bottle of vodka for 4 six packs of beer making his MRS = 4. A utility function for these preferences is U(V,B) = aV + bB, where a > 0, b > 0 and a/b = 4.

Answer to Question 2

A