Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Microeconomics Expert

Suppose that consumers value gasoline because, if they own a car, it allows them to produce travel services according to
s = a + bg;

where s denotes travel services produced, g denotes gallons of gasoline, and a and b are parameters which depend on the consumer's location and automobile. Whether or not the consumer owns a car, they can still produce travel services by walking (which costs nothing): in this case, s = 1.

Consumers derive utility from travel services via the utility function u(x; s) = (1 ) log(x) + log(s). (you may regard x as expenditures on goods other than travel services, so that the price of x is 1). The consumer has income equal to y, and gasoline costs p/gallon.

a) Derive the consumer's Marshallian demand for gasoline.
b) If a = 0, b = 1, = 0:05, and p = 2, below what level of income will car-owners choose to walk?
c) Assuming the same parameters as in the last problem, if someone with an income of y = 20; 000 doesn't own a car, what is the maximum amount they'd be willing to pay for a car?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M947010

Have any Question? 


Related Questions in Microeconomics

Problem 1 roberts new way vacuum cleaner company is a newly

Problem 1: Robert's New Way Vacuum Cleaner Company is a newly started small business that produces vacuum cleaners and belongs to a monopolistically competitive market. Its demand curve for the product is expressed as Q ...

Assignmentyou have been offered a paralegal position with a

Assignment You have been offered a paralegal position with a firm in Raleigh, NC. A local winemaker has contacted your firm for legal assistance. No one in the firm knows anything about this subject but would like to exp ...

Given the following chart answer the questions below

Given the following chart answer the questions below, assuming that all resources and technology are fixed for this farm. Corn(bu)    Soybeans(bu) 20,000             0 16,000             5000 12,000             9000 8,00 ...

From the scenario for katrinas candiessuggest one1method in

From the scenario for Katrina's Candies,suggest one(1)method in which Herb could use a cost-benefit analysis to argue for or against an expansion. Create three optimal decision rules for Katrina's Candies(e.g.,whether to ...

Assignmentin many instances public relations activities

Assignment In many instances public relations activities take the form of damage control, and in these instances, the firm is in a reactive public relations strategy mode. Although a reactive strategy may seem a contradi ...

Assignmentquestion 1 how is a project baseline used to

Assignment Question 1) How is a project baseline used to guide the execution of the project's work, to evaluate progress and performance, and to control the project? Also, as you continue to think about monitoring and co ...

Q1 show a short run situation where a perfectly competitive

Q1. Show a short run situation where a perfectly competitive firm is earning negative profit but deciding that it would be profitable to continue production for the short run. Include in your graph, ATC, AVC, MC, AR, P, ...

Discussionapplications and best practices please respond to

Discussion "Applications and Best Practices" Please respond to the following: • Propose two applications of the knowledge that you have learned in this course to your current or a future position. Provide a rationale for ...

Economics assignmentassignment is due tomorrow sunday

Economics assignment ASSIGNMENT IS DUE TOMORROW SUNDAY 09/18/16 AT 10AM APA NEEDED FOR TOM MUTUNGA ONLYYYYYYYYYYYYYYY Option Identify at least two professional organizations in your chosen field. Research the organizatio ...

Discussion questions1 firms made a come back by trimming

Discussion Questions 1) Firms made a come back by trimming costs, reducing unused capacity and increasing profits. List at least two issues in which they focus on. 2) What are the effects of nonperforming loans on a bank ...

  • 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