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Author Question: Blutarsky is throwing a party at his Fraternity and is trying to choose what booze to buy. A bottle ... (Read 65 times)

Sufayan.ah

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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


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Jmfn03

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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


Sufayan.ah

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Reply 2 on: Jul 1, 2018
YES! Correct, THANKS for helping me on my review

LVPMS

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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