Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please answer this for me Approved PART I - Answer all the questions in this part Question 1 (24 points) Let a consumer's utility be

image text in transcribed

please answer this for me

image text in transcribed
Approved PART I - Answer all the questions in this part Question 1 (24 points) Let a consumer's utility be given by U (x, y, z) = In(x) + In( y) + In(2 + z). The consumer has a budget constraint of x + 3y + 2z = 18. a) What are the optimal choices for this consumer? (7 marks) b) What would the optimal choices be if income were increased from 18 to 19? Compute the optimal bundle that maximises the utility function and show the changes in the optimal bundle from a) to b) in a graph. (7 marks) c) What is the consumer's utility in each case? (4 marks) d) How do you interpret the Lagrange multiplier in b)? Show how you could use the Lagrange multiplier to estimate the change in consumer utility caused by increasing her budget from 18 to 19 without having to resolve for x, y, and z in (c). (6 marks) Question 2 (13 points) Consider the following game Player 2 A B C D Player 1 Up 1, 1 2, 2 3, 4 9. 3 Down 2, 5 3, 3 1, 2 7, 1 a) Find all the pure-strategy Nash Equilibria. (6 Marks) b) Find a mixed-strategy Nash Equilibrium of the game. (7 Marks)

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

Managers And The Legal Environment

Authors: E. Bagley

9th Edition

1337555177, 978-1337555173

More Books

Students also viewed these Economics questions

Question

1. Why do we trust one type of information more than another?

Answered: 1 week ago