BPUB250
Problem Set1
Due: January 2526, 2012 in Class
Question 1
Last Friday recitation, we looked at an example of "Maximizing a rectangular area having
perimeter 24 feet". How can this be extended if we have three variables? Monica has 24 hours to
spend on doing Bpub250 problems (B hours), socializing (S hours), or napping (N hours). Her
objective is to have her utility U=B²SN be as large as possible.
Formally (mathematically) state Monica's optimization problem. How many hours should she
spend on each activity? What is the highest product (U=B²SN) she can attain?
Question 2
The Burrito sellers in University City have a market supply function of
Q
s
=65P250
, where
Q
s
is
the number of burritos produced. Wharton students’ initial demand for burritos is given by
Q
d
=
12510P+I,
where
I
represents Wharton students’ income.
The market for burritos is perfectly
competitive.
(a)
Solve for the equilibrium price and quantity of burritos as a function of income.
(b)
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 Spring '08
 Seim
 Supply And Demand, Jennifer, burritos, Wharton students, University City burritos

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