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Chapter 20: Q. 13 (page 453)

In Problem 20-12, if the consumer's income rises to S190per week, what new quantities characterize the new consumer optimum?

Short Answer

Expert verified

As a result, the student will spend 8on 5subscriptions to economics statistics applications and 120on 3subscriptions to office productivity apps.

Step by step solution

01

Step :1 Introduction 

The total utility of a commodity is the sum of the utility gained by an individual from consuming all units of the product.

02

Step : Explanation 

There are two apps available. One is an Economics Statistics app subscription, while the other is an Office Productivity app subscription. The cost of a year's membership to the Economics Statistics app is $2. The cost of a year's membership to the office productivity app is $60. The individual's weekly earnings are $ 190.

03

Step :3 Economics Statistics 

The following table lists the number of subscriptions for the Economics Statistics app and the costs for the Office Productivity app:

04

Step :4  Statistics App

The individual will purchase 5units of economics statistics apps, which will provide 91utils, and then 3units of office productivity apps, which will provide 850utils. Individuals paid $190on 5 subscriptions to economics statistics apps and 3subscriptions to office productivity applications.

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Most popular questions from this chapter

Using your answer to Problem F-8, draw Sue's demand curve for soft drinks.

At a consumer optimum involving goods Xand Y, the marginal utility of good Xequals 3 utils. The price of good Yis three times the price of good X. What is the marginal utility of goodY?

Distinguish between total and marginal utility and discuss why marginal utility ultimately falls as a person consumes more of an item.

Suppose that at a higher satisfaction level than in Problem F-3, Sue's constant-utility preferences are as shown in the table below. Calculate the slope of Sue's new budget constraint using the information peovided in Problem F-5. Supposing now that the price of a soft drink falls to $1, find the combination of goods that satisfies Sue's utility-maximization problem in light of her budget constraint.

As an individual consumes more units of an item, the person eventually experiences diminishing marginal utility. This means that to increase marginal utility, the person must consume less of an item. Explain the logic of this behavior using the example in Problem 20-1.
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