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Homework answers / question archive / Allyson has preferences for Doubles (D) and Solo (S) given by: Utility = /1
Allyson has preferences for Doubles (D) and Solo (S) given by: Utility = /1.618 * DOS Allyson wishes to generate K utils from the consumption of doubles and solo over the next month. Select a value for k between (26 - 129] and generate the seven (7) values of Doubles that will grant Allyson exactly Kutils when paired with Solo for the following Solo values: 1, 23, 5, 10, 15 and 20. Graph this indifference curve with Solo on the X- axis. (NB: The graph does not necessarily have to be drawn to scale, however, the exact value for each point should be given to 2 decimal places). [4 marks] 1f. Suppose that the supply curve for the labor to a firm is given by L = X*W and the marginal expense of labor curve is given by MEL = L/ (X/2) where w is the market wage. Suppose also that the firm's demand for labor (marginal revenue product) curve is given by L = Y - X*MRPL Select a value for X between [105-249] and a value for Y between [1234-1777] such that each student should have a unique answer. a. If the firm acts as a monopsonist, how many workers will it hire in order to maximize profits? [1 mark] b. What wage will it pay? [1 mark] c. How will this wage compare to the MRPL at this employment level? [1 mark] Question 2 2a. Sangeeta spends $A per week on two goods X and Y. The price of good X is given by Px = $B and the price of good Y is given by Py = $16.00. Select a value for A between (2100 - 2900) and a value for B between ($18 - $38), such that each student should have a unique answer. Sangeeta maximizes her utility at MRSx,=What quantities of X and Y does she buy each week in equilibrium? Write an expression for X in terms of Y. (example: X=3Y). [1 mark] ii) What quantity of X does she buy? [1 mark] iii) What quantity of Y does she buy? [1 mark]
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