3.6 Express FFs utility function in terms of a single good? What is that good? Suppose foot-long...

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3.6 Express FF’s utility function in terms of a single good? What is that good?

Suppose foot-long hot dogs cost £2.50 each, rolls cost £0.50 each, mustard costs £0.15 per gram, and cheese costs £0.50 per gram. How much does the good deined in part

(b) cost?

If the price of foot-long hot dogs increases by 50 per cent (to £3.75 each), what is the percentage increase in the price of the good?

How would a 50 per cent increase in the price of a roll affect the price of the good? Why is your answer different from part (d)?

If the government wanted to raise £1.00 by taxing the goods that FF buys, how should it spread this tax over the four goods so as to minimise the utility cost to FF?

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Microeconomic Theory Basic Principles And Extensions

ISBN: 9781473729483

1st Edition

Authors: Christopher M Snyder, Walter Nicholson, Robert B Stewart

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