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Can someone help with these two questions? Thank you. In Kommuneby there is a market for brooms, where demand comes from a single utility-maximizing consumer.
Can someone help with these two questions? Thank you.
In Kommuneby there is a market for brooms, where demand comes from a single utility-maximizing consumer. The market demand function is: D(p) = 600 200p The supply of brooms comes from a single price-taking and profit-maximizing producer. The market supply function is: S(p) = 400 + 100p (a) Can you suggest a cost function for the broom producer that is in line with the supply function above? (Hint: Look at the answer to (2.b) above). (b) Can you suggest an income-level and utility function for the consumer that is in line with the demand function above? The utility function should be one in which the consumer gets utility from two things: i) brooms, and ii) consumption of all other goods as measured in kronerStep by Step Solution
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