Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

7. The Phillie Phanatic always eats his ballpark franks in a special way- I foot-long hot dog together with precisely I bun, 1 oz. of

image text in transcribed
image text in transcribed
7. The Phillie Phanatic always eats his ballpark franks in a special way- I foot-long hot dog together with precisely I bun, 1 oz. of mustard, and 2 oz. of pickle relish. His utility is a function only of these four items and any extra amounts of a single item without the other constituents is worthless. a. What form does PP's utility function for these four goods have? b. How might we simplify matters by considering PP's utility to be a function of only one good? What is that good? c. Suppose foot-long hot dogs cost $1, buns cost $.50, mustard costs $.05 per oz, and pickle relish costs $. 1 5 per oz. How much does the good defined in part b cost? d. If the price of foot-long hot dog increases by 50 percent (to $1.50) what is the percentage increase in the price of the good? c. How would a 50% increase in the price of the bun affect the price of the good? Why is the answer different from part d? f. If the government wanted to raise $1 in taxes by taxing the goods that PP buys, how should it spread this tax over the four goods so as to minimize the utility cost to PP

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Microeconomics

Authors: Michael Parkin

12th edition

133872297, 133872293, 978-1292094632

More Books

Students also viewed these Economics questions

Question

Personal role: This consists of service to family and friends.

Answered: 1 week ago

Question

The role of life: It consists of your own service to yourself.

Answered: 1 week ago