Çağla Ökten 1. Each day, Burcu, who is in third grade, eats lunch at school. She likes only Twinkies (t) and soda (s) and these provide her a utility of U(t, s) = √ts a. Find Burcu's demand for t and demand for s. b. If Twinkies cost $0.1 each and soda costs $0.25 per cup, how would Burcu spend the $1 that her mother give her? c. If the school tries to discourage Twinkie consumption by raising the price to $0.40, by how much will Burcu's mother have to increase her lunch allowance to provide her with the same level of utility she received in part a? 2. Ahmet's utility over good x and y is represented by the following

Çağla Ökten 1. Each day, Burcu, who is in third grade, eats lunch at school. She likes only Twinkies (t) and soda (s) and these provide her a utility of U(t, s) = √ts a. Find Burcu's demand for t and demand for s. b. If Twinkies cost $0.1 each and soda costs $0.25 per cup, how would Burcu spend the $1 that her mother give her? c. If the school tries to discourage Twinkie consumption by raising the price to $0.40, by how much will Burcu's mother have to increase her lunch allowance to provide her with the same level of utility she received in part a? 2. Ahmet's utility over good x and y is represented by the following

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.1P

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