Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

a. You are given the following total utilities of apples and mineral water obtained by Bervin. Given that each apple cost K5, each bottle of

a. You are given the following total utilities of apples and mineral water obtained by Bervin. Given that each apple cost K5, each bottle of water cost K2, and Bervin's income is K22, find the optimal combination of apples and bottles of mineral water.[10 Marks]

Number of units consumed of a commodity

(Utils)

(Utils)

1 30 20 2 55 38 3 75 54 4 90 68 5 100 80 6 105 90 7 106 98

b. With the aid of a clearly labelled diagram(s), explain the assumptions underlying the indifference analysis[5 Marks] c. Martha, a former actress, spends all her income on plays and movies and likes plays exactly three times as much as she likes movies.i. Draw her indifference map.[3 Marks] ii. Martha earns K120/week. If play tickets cost K12 each and movie tickets cost K4 each, show her budget line and highest attainable indifference curve. How many plays will she see?[5 Marks] iii. If play tickets are K12, movie tickets K5, how many plays will she attend?[2

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_2

Step: 3

blur-text-image_3

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

Managerial economics

Authors: william f. samuelson stephen g. marks

7th edition

9781118214183, 1118041585, 1118214188, 978-1118041581

More Books

Students also viewed these Economics questions