3.6 Express FFs utility function in terms of a single good? What is that good? Suppose foot-long...
Question:
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?
Step by Step Answer:
Microeconomic Theory Basic Principles And Extensions
ISBN: 9781473729483
1st Edition
Authors: Christopher M Snyder, Walter Nicholson, Robert B Stewart