Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 2.3P
To determine
The maximum value for the function
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Solve each of the following equations for x
x+7=14
5x+4=24
12−4x=−20
Organize each of the following equations to express Pas a function of Q.
QQ as a function of P
PP as a function of Q
Q=25−P
Q=12−3P
6Q=14−2P
Kenji is buying pizza and salad for a company lunch. Suppose that a slice of pizza costs $2.00, and a bowl of salad costs $4.00.
Let E be the amount in dollars that Kenji spends on pizza and salad. If Kenji buys P slices of pizza and S bowls of salad, then the total amount of
money he spends (E) can be represented by the equation
Now rearrange the equation you wrote above so that S is written in terms of E and P. The quantity of salad he buys can be represented by the
equation
Suppose Kenji has $32.00 to spend on pizza and salad; that is, E= $32.00.
Complete the following table with the values of P or S that make the equation true.
Hint: To complete the first row, determine the number of salad bowls Kenji can purchase with $32.00, when the number of pizza slices he purchases
is 0.
Budget Pizza
Salad
(Dollars) (Slices) (Bowls)
32.00
0
32.00
8
32.00
00
0
Use the Lagrange multiplier method to optimize the objective function 30xy subject to the
constraint x + 25y = 500.
Chapter 2 Solutions
Microeconomic Theory
Knowledge Booster
Similar questions
- Tim is buying pizza and salad for a company lunch. Suppose that a slice of pizza costs $4.00, and a bowl of salad costs $5.00. Let ♬ be the amount in dollars that Tim spends on pizza and salad. If Tim buys P slices of pizza and S bowls of salad, then the total amount of money he spends (B) can be represented by the equation Now rearrange the equation you wrote above so that S is written in terms of E and P. The quantity of salad he buys can be represented by the equation Suppose Tim has $40.00 to spend on pizza and salad; that is, E = $40.00. Complete the following table with the values of P or S that make the equation true. Hint: To complete the first row, determine the number of salad bowls Tim can purchase with $40.00, when the number of pizza slices he purchases is 0. Budget Pizza (Dollars) (Slices) 40.00 0 40.00 5 40.00 Use the black line (plus symbols) to plot the line illustrating the combinations of pizza and salad that Tim can purchase with a budget of $40.00. SALAD (Bowis) 14…arrow_forwardSales are the function of advertising in The Dawn and Diva Magazine (X, Y). S = XY2 If the price of advertising in The Dawn and Diva Magazine is Rs.5 and Rs.10 respectively. The total budget for advertising is Rs.105. For maximizing the sales of Dawn and Diva Magazine find out the best combination of advertisements in newspapers and magazines by using the Lagrangian multiplier. please provide a complete solution with all the steps including formulas and proper workingarrow_forwardThe vending machine in Katherine's office building offers cans of pop and candies. Katherine's utility function is U = 3PC, where P is the amount of pop consumed per %3D week and C is the amount of candy consumed per week. Pop costs $1 and candy costs $0.5 per bag. If Katherine has $10 to spend, she will consume A bags of candy.arrow_forward
- 1. Use the Method of Lagrange to solve this problem. To do so, construct the La- grangean function for this problem. Use λ1 as the Lagrange multiplier attached to the period 1 budget constraint and λ2 as the Lagrange multiplier attached to the period 2 budget constraint.arrow_forwardKenji is buying salad and pizza for a company lunch. Suppose that a bowl of salad costs $3.00, and a slice of pizza costs $4.00. Let E be the amount in dollars that Kenji spends on salad and pizza. If Kenji buys S bowls of salad and P slices of pizza, then the total amount of money he spends (E) can be represented by the equation Now rearrange the equation you wrote above so that P is written in terms of E and S. The quantity of pizza he buys can be represented by the equation Suppose Kenji has $48.00 to spend on salad and pizza; that is, E= $48.00. Complete the following table with the values of S or P that make the equation true. Hint: To complete the first row, determine the number of pizza slices Kenji can purchase with $48.00, when the number of salad bowls he purchases is 0. Pizza Budget Salad (Dollars) (Bowls) (Slices) 48.00 0 48.00 48.00 8 0arrow_forwardThe production function for a company is P = 300x 0.75 0.25, where P is the amount produced given x labor and y units of equipment. Each unit of labor costs $900 and each unit of equipment costs $350. A the goal of the company is to minimize cost given a fixed production goal of 9000 units produced, what meaning of the Lagrange multiplier >? The production function for a company is P = 300x0.75 0.25, where P is the amount produced given x labor and y units of equipment. Each unit of labor costs $900 and each unit of equipment costs $350. A the goal of the company is to maximize production given a fixed budget of $50,000, what is the meaning Lagrange multiplier /?arrow_forward
- Assuming that each of the following functions are linear, give an economic interpretation of the slope of the function: F(q) is the revenue from producing q units of output b. G(x) is the cost of purchasing x units of some commodity H(p) is the amount of commodity demanded by households when its price is p d. C(Y) is the national consumption when national income is Y e. S(Y) is the total national savings when national income is Y a. С.arrow_forwardAssume that that tax revenues (T) are proportional to income (Y). That means if the tax rate is equal to t, then we have T = tY.Also, consumption (C) and investment (I) functions are given as the following: C = a + b (Y – T) [where a and b are constant]I = c – dr. [where c and d are constant, and r is the interest rate] A) Find the expression of the government purchase multiplier. (Use derivative) B) What will happen to multiplier if tax rate increases? What will happen to multiplier if MPC increases?arrow_forwardRajiv is buying pizza and salad for a company lunch. Suppose that a slice of pizza costs $2.00, and a bowl of salad costs $4.00. Let E be the amount in dollars that Rajiv spends on pizza and salad. If Rajiv buys P slices of pizza and S bowls of salad, then the total amount of money he spends (E) can be represented by the equation Now rearrange the equation you wrote above so that S is written in terms of E and P. The quantity of salad he buys can be represented by the equation Suppose Rajiv has $32.00 to spend on pizza and salad; that is, E = $32.00. Complete the following table with the values of P or S that make the equation true. Hint: To complete the first row, determine the number of salad bowls Rajiv can purchase with $32.00, when the number of pizza slices he purchases is 0. Budget Pizza Salad (Dollars) (Slices) (Bowls) 32.00 32.00 8 32.00 Use the black line (plus symbols) to plot the line illustrating the combinations of pizza and salad that Rajiv can purchase with a budget of…arrow_forward
- Please find the effect of Y and r if there is a decrease in the tax rate. Use the following equations and evaluate the total derivative.arrow_forward1. Which of the following equations is the correct expression of the IS curve? ao+Bo-B₁i+G a. Y = b. Y= C. d. Y= 1-α₁ (1-t) C+I+G Y = 1-a₁ (1-1) ao+Bo-B₁i+G 1+α₁ (1-t) C+I+G 1+a₁ (1-1)arrow_forwardLaffer curve In the 1980s, president Reagan based his tax and spending policies on supply side eonomics. The idea behind supply side economics is the marginal tax rate is so high it discourages work. Cutting the tax rate would end up increasing tax revenue. We develop a simple model of this idea to determine the restrictions on the utility function required to generate a Laffer curve. Let T denote the tax rate, w is the real wage rate and n the labor supply. The tax revenue is T=wnT where wn is labor income, which is the tax base. For convinience assume w is constant. There is no reason for this assumption to be true, but we impose it to focus on the restrictions on the utility function to generate the Laffer curve. As the tax rate T increases, workers substitute towards leisure and away from consumption. Hence as T rises, wn falls and tax revenues falls for high enough tax rates. Let U,V satisfy the standard assumptions. The model is static and households are endowed with one unit of…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you