Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Microeconomics Expert

A Californian college student consumes Internet services (I) and books (B). Her preferences are represented by a Cobb-Douglas utility function: U(I,B) = I1/4B1/4. The price of each good is $2 and the student has an income of $200. Over the course of the past year, the price of internet services has risen to $4, but the price of books has remained the same. The government has decided provide this student with additional money to compensate for the higher price of internet services. In order to determine the transfer the government has two consultants who have made the following suggestions:

Consultant A: The student's income should be increased by a percentage found using a consumer price index (CPI).
Consultant B: The additional income should allow the student to get her initial level of utility.

a. Find the consumer's optimal bundle before the increase in price occurs.
b. Find the consumer's optimal bundle after the increase in price occurs with income still at $200.
c. Find the amount of the transfer implied by consultant A.
d. Is the student necessarily better or worse off than before from such a transfer implied by consultant A? describe why.
e. Is the transfer implied by consultant B more or less than the amount implied by A? describe.
f. What is the precise dollar amount implied by consultant B?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M948269

Have any Question? 


Related Questions in Microeconomics

Q1 garys labor supply is given by h -10 071428w where h

Q1. Gary's labor supply is given by H = -10 + 0.71428.w, where H is the hours worked per week and w is the hourly wage rate. Mary and Terry's labor supply functions are represented by H= -2 + 0.25.w and H= -38+1.7272.w, ...

Asignmentit audit and controlchange and patch management1

Assignment IT Audit and Control "Change and Patch Management" 1. Analyze IT change management and patch management processes needed within organizations. Identify three (3) challenges organizations face when implementing ...

Paperpart i submissionit should be a complete polished

Paper Part I Submission: It should be a complete, polished artifact containing all of the critical elements of Final Project Part I, including Sections I and IV, which were not covered in the milestones. The final submis ...

The global market place selected is mumbaitoolscorp

The Global Market place selected is Mumbai. ToolsCorp Corporation is a fictitious company that does exist anywhere. For the purpose of this course, it is located it in Tennessee. As members of the senior management team ...

Assignmentthe best time to plan for a crisis is before it

Assignment The best time to plan for a crisis is before it occurs, certainly not when you're in the midst of one. Basel III has a new framework for managing bank liquidity.The liquidity coverage ratio (LCR) is for a shor ...

Assignment descriptiondo patients with no other treatment

Assignment Description Do patients with no other treatment options have a moral right to unproven drugs? Write a paper that explains and defends your view on this issue. Be sure to weave and cite the resources throughout ...

Answer all of the following questions in microsoft word

Answer all of the following questions in Microsoft Word file with complete questions and answers and attach it. 1. Do the richest people in world face scarcity of any kind of resource(s)? If they do, explain why? 2. Give ...

Assignmentafter read two articles then answer the questions

Assignment After read two articles then answer the questions below Cellini: - How does Cellini criticize Bandinelli's sculpture Hercules and Cacus (1534)? - What technical difficulties does Cellini encounter in making hi ...

Question should insider directors constitute the majority

Question: Should insider directors constitute the majority of a corporate board instead of investors?

Part awe have discussed several examples of constrained

Part A: We have discussed several examples of constrained utility maximisation in lectures and in classes. For example, we have learned how to find the optimal bundle of goods consumed by an individual trying to maximise ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate