Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Antonia goes to a nature preserve that charges $3 admission, but her mom pays, so it is free for her. She asks permission to

 

Antonia goes to a nature preserve that charges $3 admission, but her mom pays, so it is free for her. She asks permission to buy a pocket knife from the trail shop so she can practice whittling, but her mom will not allow the purchase. Here is the anticipated total utility for each good: Preserve Visit Total Utility Pocket Knife Total Utility 1 42 1 60 12 75 2 100 3 105 3 110 14 123 4 115 5 135 5 105 6 141 6 85 7 144 7 60 a) Antonia's grandfather comes to town and offers to pay for as many pocket knives as she wants. How many should she buy? Explain. b) What is the marginal utility of her first visit to the preserve? c) Antonia's mom makes her return all the pocket knives, so she is back to zero. Antonia will now pay for her own preserve visits ($3). All the pocket knives are $5. Complete a table that shows the marginal utility per dollar for Antonia's potential preserve visits and pocket knife purchases. d) For her birthday, Antonia's mom gives her $20. She says that she is now mature enough to buy pocket knives, but she also must purchase admission to the preserve on her own. She buys as many preserve visits and pocket knives as she can. What is her optimal consumption bundle for visits and pocket knives? Explain. e) Does Antonia have any birthday money left?

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

Entrepreneurship Successfully Launching New Ventures

Authors: Bruce R. Barringer, R. Duane Ireland

4th Edition

0132555522, 978-0132555524

More Books

Students also viewed these Economics questions

Question

If the job involves a client load or caseload, what is it?

Answered: 1 week ago