Econ 100A – Microeconomics
Professor Reynolds
Department of Economics
University of California, Berkeley
Problem Set 2
Due 8:10 am Feb 8th
1.
This problem illustrates that the Lagrange method of solving does not work in all
cases.
A. I only consume ice cream and bananas in the form of banana splits, which
I make with three scoops of ice cream and one banana.
The price of ice
cream is $0.50 a scoop.
Bananas are $0.25 each.
I have $5 to spend on
ice cream sundaes this week.
Set up the Lagrangean as if you were going
to use it to solve.
B. Explain why you cannot solve this optimization problem using the
Lagrangean. (You may wish to start solving & then see where you get
stuck.)
C. Graph the budget constraint & some indifference curves.
D. What is the optimum combination of ice cream scoops and bananas that
maximize utility given this budget constraint? (Assume you can consume
fractions of bananas and scoops.)
2.
This problem explores my quasilinear tastes for vitamins, x
1,
in relation to other
consumption in dollars, x
2
.
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 Spring '08
 Woroch
 Microeconomics, Utility, ice cream, Professor Reynolds

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