11) Stanley consumes only white and red wines and his utility function can be described by U(R,W) = R 0.40 ∙W 0.60, where R is the number of bottles of red wine and W is the 4 number of bottles of white wine that he consumes per month. Suppose that his income is $500 and the price of a bottle of red wine $20 and the price of a bottle of white wine is $15. In this case, Stanley will purchase _____ bottles of red wine and _____ bottles of white wine per month. Next, suppose that the price of red wine goes up to $35 per bottle. In this case, Stanley would consume ______ quantity of bottles of white wine compared to the original situation. A) 10; 20; smaller B) 20; 10; smaller C) 10; 20; the same D) 20; 10; the same E) None of the above.
11) Stanley consumes only white and red wines and his utility function can be described
by U(R,W) = R
0.40
∙W
0.60, where R is the number of bottles of red wine and W is the
4
number of bottles of white wine that he consumes per month. Suppose that his income is
$500 and the
$15. In this case, Stanley will purchase _____ bottles of red wine and _____ bottles of
white wine per month. Next, suppose that the price of red wine goes up to $35 per bottle.
In this case, Stanley would consume ______ quantity of bottles of white wine compared
to the original situation.
A) 10; 20; smaller
B) 20; 10; smaller
C) 10; 20; the same
D) 20; 10; the same
E) None of the above.
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