1. Compute the MRS for each of the following utility functions, and explain which one is
2. Nancy spends all of her food budget on pizza and milk. Her utility tnction is:
U = (1192
1. Suppose the demand and supply functions of two goods ql and q2 are as follows:
Q5 =15 3P1 +1732
95' = 6 2P2 + P1
Q13 = 2 + P1
Q; = 1 + P2
Solve for the equilibrium prices and quantities.
2. The utility functions of consumers
Page 1 of 2
1. Using the following equations:
MB 2 40 Q
Calculate the market equilibrium output and price.
Calculate the socially optimum output and price.
Show the dead weight loss at the market
1. By next year, your stock has a 25% chance of being worth $400 and a 75% chance of being
worth $200. What are the expected value and the variance.
2. Hugo has a concave utility function of ulw)=w'5. His only asset is shares in an int
1. The demand and supply for Pepsi are given by: Qd = 140 - 25P, and Qs = -20 + 75P.
a. Find the equilibrium price and quantity before tax.
b. Show this equilibrium on a diagram.
c. Calculate consumers' surplus, and producers' surplus.
1. Nancy spends all of her food budget on pizza and milk. Her utility inction is:
U = Eliq:
Where ql is the quantity of pizza (slices) and q; is the quantity of milk (quarts). Her
monthly food budget is $120, P1=$3 and P2 = $2.
Exercise Ch.02 Supplyhemand
1. The following equations describe the demand and supply of good Q:
Qd = 100~ 2P
Qs = 20 + 2P
a. Calculate the equilibrium price and quantity, and show them on a diagram.
b. Calculate the amount of shortage (excess demand), if