Write down the budget constraint equation for him

Assignment Help Business Economics

Reference no: EM13852072

Suppose a person has $20 to spend on music and likes both rap music (R) and country music (C) with a set of preferences so that U=C^1/2R^1/2. Suppose that the iTunes price of a rap music song is PR=2 and the price of a country music song is PC=1.

A. Write down the budget constraint equation for him.

B. Show his optimal consumption choice in a graph. Use the horizontal axis for number of rap music songs (R) and vertical axis for country music (C). Draw the budget constraint, indifference curves, the optimal choice (a point) in the graph. Be as accurate as possible, and label some key points with numbers (their values).

C. Solve for the optimal choice for him using calculus. Find the value for R, C, and his utility.

Reference no: EM13852072

Questions Cloud

Characteristics of the most effective company development : Discuss the characteristics of the most effective company development strategies

How does the production possibilities curve : Farmer brown produces eggs and milk on his farm. He initially produces at point A. HE WOULD LIKE to produce the same amount of eggs per day and increase his milk production by one gallon per day. Is this possible? Why or why not. What is the opportun..

Ratios are generally derived via division : Ratios are generally derived via division

Present and future values for different interest rates : Present and future values for different interest rates. Find the following values. Compounding/discounting occurs annually. Round your answers to the nearest cent. An initial $700 compounded for 10 years at 9%. Define present value. How are present v..

Write down the budget constraint equation for him : Suppose a person has $20 to spend on music and likes both rap music (R) and country music (C) with a set of preferences so that U=C^1/2R^1/2. Suppose that the iTunes price of a rap music song is PR=2 and the price of a country music song is PC=1. Wri..

What stereotypes might you already have when you consider : What stereotypes might you already have when you consider this audience? It's okay to be honest here. Once you acknowledge what you believe or have heard/read/been taught, you can better focus on the reality.

Identical marbles of mass : Two identical marbles of mass m and radius R sit in a glass beaker as shown below. Thediameter of the beaker is 3R. Express your answers in terms of m, g and numericalconstants. Hint: Draw FBDs of each marble starting with the upper marble.

What is the yield to the investor who holds the bonds : A U.S. government bond matures in 10 years. Its quoted price is now 96.4, which means the buyer will pay $96.40 per $100 of the bond’s face value. The bond pays 5% interest on its face value each year. If $10,000 (the face value) worth of these bonds..

Gap between the desired and available transactions : From California to New York, legislative bodies across the United States are considering eliminating or reducing the surcharges that banks impose on noncustomers, who make $14 million in withdrawals from other banks’ ATM machines. Estimates suggest t..

User Account

All Pages