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Unformatted text preview: x = 1 = 4 , p y = 1 , and p z = 2 and Bob&s income is 2 . (a) Solve for optimal x and y if z = 0 . (b) Show that any choice that results in z > reduces utility from that above. (c) Why is z = 0 optimal here? 5. Problem 5.2 in the text. 6. On Monday the price of a slice of pizza is $2 and a coke is $1 . At these prices Jane spends her $30 of lunch money to purchase 11 slices of pizza and 8 cokes for her kids. On Friday the prices of pizza and coke are reversed so the price of a slice is $1 and the price of a coke is $2 . At these prices Jane uses her $30 to purchase 10 slices of pizza and 10 cokes. Assuming that her (and her kids&) preferences have not changed between Monday and Friday, are her utility maximizing choices consistent with Jane (and her kids) having rational preferences? Briey explain your answer....
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This note was uploaded on 12/21/2009 for the course ECON 1211 taught by Professor Govel during the Spring '08 term at Columbia.
- Spring '08