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

Discussion questionplease read thoroughly and provide

Discussion Question Please read thoroughly and provide references • Manufactures of smartphones design products to be interactive with consumers. To remain competitive, designers are focused on getting a new product to m ...

New jersey human servicesassignment evaluation of the

NEW JERSEY HUMAN SERVICES Assignment: Evaluation of the Agency's Budgeting and Cumulative Report As a consultant, you need to develop an in-depth analysis and evaluation of the selected agency's budgeting and then provid ...

The economy is full employment now the government wants to

The economy is full employment. Now the government wants to change the composition of demand toward investment and away from consumption without, however, allowing aggregate demand to beyond full employment. What is requ ...

Question 1which of the following has not been identified as

Question 1 Which of the following has NOT been identified as a basic consumer right? Consumers have a right to safe products. Consumers have a right to collude. Consumers have a right to be informed about a product. Cons ...

Leasing equipmentfor catherine owens onlybullsuggest one

Leasing Equipment For Catherine Owens Only • Suggest one key economic factor that motivates leasing as an option in acquiring an asset. Explain the potential asymmetries that may exist where leasing may be beneficial to ...

Fiscal policy modulewhich has a larger effect on aggregate

Fiscal Policy Module Which has a larger effect on aggregate demand: an increase in government expenditure or an equal-sized decrease in taxes? Explain your answer. To eliminate a recessionary gap, which fiscal policy sho ...

Task list principles of microeconomicsyou are starting

Task List: : Principles of Microeconomics You are starting your own Internet business. You decide to form a company that will sell cookbooks online. Justcookbooks.com is scheduled to launch 6 months from today. You estim ...

Assignment1laura just opened a coffee shop in nyc named

Assignment 1. Laura just opened a coffee shop in NYC named Squirrel Coffee. Hoping to cater to the hipsters, she sells a special kind of cold brew infused with nitrogen, which she dubs ‘nitro coffee'. Assume for the purp ...

Problem -the table below gives the income of each of four

Problem - The Table below gives the income of each of four individuals who are in a region. Calculate and plot the Lorenz curve and calculate the Gini coefficient for this economy. individual income 1 100 2 200 3 300 4 4 ...

Assignment money and pricethe organizations strategic plan

Assignment: Money and Price The organization's strategic plan you wrote about calls for an aggressive growth plan, requiring investment in facilities and equipment, growth in productivity, and labor over the next five ye ...

  • 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

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen