This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Suppose Abe is allocating his entire income and he receives 100 units of utility per dollar from the ... (Read 179 times)

CharlieWard

  • Hero Member
  • *****
  • Posts: 578
on: Jun 29, 2018
Suppose Abe is allocating his entire income and he receives 100 units of utility per dollar from the tenth slice of pizza and 200 units of utility per dollar from his second soda.
 
  Is Abe maximizing his utility? Should Abe change his consumption of pizza and soda?

Question 2

The price effect is equal to the
 
  A) substitution effect.
  B) substitution effect plus the income effect.
  C) marginal rate of substitution minus relative prices.
  D) substitution effect minus the income effect.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

SeanoH09

  • Sr. Member
  • ****
  • Posts: 323
Reply #1 on: Jun 29, 2018
Answer to Question 1

Abe is not maximizing his utility because his marginal utility per dollar from pizza does not equal his marginal utility per dollar from soda. Abe should consume more soda (because it provides more satisfaction per dollar) and less pizza.

Answer to Question 2

B


CharlieWard

  • Member
  • Posts: 578
Reply 2 on: Jun 29, 2018
Thanks for the timely response, appreciate it

Mochi

  • Member
  • Posts: 300
Reply 3 on: Yesterday
:D TYSM

« previous next »
 

Did you know?

Hip fractures are the most serious consequences of osteoporosis. The incidence of hip fractures increases with each decade among patients in their 60s to patients in their 90s for both women and men of all populations. Men and women older than 80 years of age show the highest incidence of hip fractures.

Did you know?

Cocaine was isolated in 1860 and first used as a local anesthetic in 1884. Its first clinical use was by Sigmund Freud to wean a patient from morphine addiction. The fictional character Sherlock Holmes was supposed to be addicted to cocaine by injection.

Did you know?

There are 60,000 miles of blood vessels in every adult human.

Did you know?

Atropine was named after the Greek goddess Atropos, the oldest and ugliest of the three sisters known as the Fates, who controlled the destiny of men.

Did you know?

Though the United States has largely rejected the metric system, it is used for currency, as in 100 pennies = 1 dollar. Previously, the British currency system was used, with measurements such as 12 pence to the shilling, and 20 shillings to the pound.

The functional structure of the peripheral nervous system. (A) Afferent or sensory neurons carry sen The functional structure of the peripheral nervous system. (A) Afferent or sensory neurons carry sen
Worldwide Variations in Population and Income Levels Worldwide Variations in Population and Income Levels
Global Stratification: Income of the World's Nations Global Stratification: Income of the World's Nations
Apply long effleurage stroke to entire arm, from hand to shoulder. Brush off from shoulder to hand. ... Apply long effleurage stroke to entire arm, from hand to shoulder. Brush off from shoulder to hand. ...
How to perform conversions between units with prefixes ranging from pico to mega How to perform conversions between units with prefixes ranging from pico to mega
Energy and Energy Units Energy and Energy Units
Video: Monohybrid crosses

For a complete list of videos, visit our video library