Question
A) The total utility (U) depends on consuming Q as follows: U = 25Q - 2Q^2 The marginal utility (MU) or personal demand (D) function
A) The total utility (U) depends on consuming Q as follows: U = 25Q - 2Q^2
The marginal utility (MU) or personal demand (D) function is P = 25 - 4Q, where P is the reservation price per-unit of Q, that is the price you are willing to pay for each unit of Q.
Based on the above U and D information, answer the following:
(1) Using this calculator (https://www.desmos.com/calculator) graph together or separately U and D. What is the Q at which you maximize U?
(2) The per-unit Market Price for Q is PM= 10. they decide to buy. Compute: how many units of Q they will buy, total utility (TU), total expenditures (TE), and consumer surplus (CS).
(3) At PM= 10, for rationing purposes, the Government imposes a quota on Q = 2.5. They decide to buy. Compute: total utility (U), total expenditures (TE), and consumer surplus (CS).
(4) For some reason, the Government decides to regulate the market price at PM= 15. Due to various constraints that you experience in your life, they cannot consume less than Q = 4. they decide to buy. Compute: total utility (TU), total expenditures (TE), and consumer surplus (CS).
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started