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

Author Question: The table above shows Danielle's utility from ice cream and romance novels. a) What is Danielle's ... (Read 228 times)

jazziefee

  • Hero Member
  • *****
  • Posts: 505
on: Jun 29, 2018
The table above shows Danielle's utility from ice cream and romance novels.
 
  a) What is Danielle's marginal utility from the 4th novel?
  b) The price of ice cream is 5 per gallon and a novel is 10. If Danielle's budget for these two goods is 50 and she buys 2 gallons of ice cream, how many novels can she buy? If she buys 6 gallons of ice cream, what is her marginal utility per dollar spent on novels?
  c) Which combination of the two goods is better: 4 gallons of ice cream and 3 novels or 6 gallons of ice cream and 2 novels?

Question 2

If the donut industry is perfectly competitive and is in long-run equilibrium, then the price of a donut
 
  A) is greater than marginal cost.
  B) is greater than short-run average cost.
  C) is greater than long-run average cost.
  D) equals long-run average cost.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

djofnc

  • Sr. Member
  • ****
  • Posts: 318
Reply #1 on: Jun 29, 2018
Answer to Question 1

a) Danielle's marginal utility from the 4th novel is 560 - 450 = 110.
b) When Danielle buys 2 gallons of ice cream, she spends 5  2 = 10 on ice cream. So Danielle spends the rest of her budget, which is 50 - 10 = 40, on novels. Because the price of a novel is 10, she buys 40  10 = 4 novels. When Danielle buys 6 gallons of ice cream, she spends 5  6 = 30 on ice cream. So Danielle spends the rest of her budget, which is 50 - 30 = 20, on novels. Because the price of a novel is 10, she buys 20  10 = 2 novels. So her marginal utility from the second novel is 320 - 170 = 150 and, since the price of a novel is 10, the marginal utility per dollar is 150  10 = 15.
c) 4 gallons of ice cream and 3 novels is better. In both cases Danielle spends all her budget. But if she buys 4 gallons of ice cream and 3 novels, her total utility is 320 + 450 = 770, while if she buys 6 gallons of ice cream and 2 novels, her total utility is 420 + 320 = 740.

Answer to Question 2

D


jazziefee

  • Member
  • Posts: 505
Reply 2 on: Jun 29, 2018
Excellent

ASDFGJLO

  • Member
  • Posts: 335
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

More than 150,000 Americans killed by cardiovascular disease are younger than the age of 65 years.

Did you know?

There used to be a metric calendar, as well as metric clocks. The metric calendar, or "French Republican Calendar" divided the year into 12 months, but each month was divided into three 10-day weeks. Each day had 10 decimal hours. Each hour had 100 decimal minutes. Due to lack of popularity, the metric clocks and calendars were ended in 1795, three years after they had been first marketed.

Did you know?

People often find it difficult to accept the idea that bacteria can be beneficial and improve health. Lactic acid bacteria are good, and when eaten, these bacteria improve health and increase longevity. These bacteria included in foods such as yogurt.

Did you know?

Intradermal injections are somewhat difficult to correctly administer because the skin layers are so thin that it is easy to accidentally punch through to the deeper subcutaneous layer.

Did you know?

If you use artificial sweeteners, such as cyclamates, your eyes may be more sensitive to light. Other factors that will make your eyes more sensitive to light include use of antibiotics, oral contraceptives, hypertension medications, diuretics, and antidiabetic medications.

Sequential decline of whale catches in the Antarctic shows the strong effect of human predators. Sequential decline of whale catches in the Antarctic shows the strong effect of human predators.
A utility knife uses replaceable blades and can cut carpet and other materials. A utility knife uses replaceable blades and can cut carpet and other materials.
Adjust drape for abdominal massage, and stand at the side of the table facing the head. Place hands ... Adjust drape for abdominal massage, and stand at the side of the table facing the head. Place hands ...
How to create a table of values displaying commission and earnings (Question 1) How to create a table of values displaying commission and earnings (Question 1)
Table Tennis Racket Table Tennis Racket
table table
Video: Embryonic development - Weeks 5 to 8

For a complete list of videos, visit our video library