If the income of a consumer is $7.591, the price of a Clamato is $33.3, the pric

Question

If the income of a consumer is $7.591, the price of a Clamato is $33.3, the price of a lemon is $4.38 and the utility function of the consumer is (c,f) min(ac,bl} where a = 15 and b = 2, answer the following questions. 1. What is the demand of Clamato? 2. What is the demand of the lemon? 3. What is the consumption of the Clamato that maximizes the utility of the consumer? 4. What is the power consumption of lemon that maximizes the utility of the consumer? 5. What is the value of the maximu utility? Palabras:145 de ón Sec. 1 Páginas:1 de 10 Vista Dis Mac

Explanation / Answer

Income is 7.591

Price of clomato= $33.3

Price of lemon= $4.38

Budget constraint condition is

7.591= 33.3c+4.8l ------------------------------(1)

from utility function lets assume ac=bl

i.e. 15c=2l

l= 15c/2

Put this value in udget constraint i.e (1)

7.591= 33.3c+4.8 * 15c/2

7.591= 33.3c+ 36c

c= 0.10

demand for clamato is 0.10

now for finding demand of lemon we can sustitute the demand of clamato in budget constraint equation

7.591= 33.3c+4.8l

7.591= (33.3*0.1)+48l

Note: please check the question if the price of clamato is $3.33 instead of $33.3

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