The marginal utility of product A is defined by Ml -4q+37. and for product B, it
ID: 1213166 • Letter: T
Question
The marginal utility of product A is defined by Ml -4q+37. and for product B, it' marginal utility is defined by MU = 70-6q. the price for product A is $ 1.00 and the price for product B is $2.00. If the customer has a budget of SI 1.00 tor any combination of product A and B. What would be his/her rationaldecission on the amount of product A and B to buy? The total cost a product is defined by the expression TC=0.001q -0.025q'-5q + 100.11 the price of the product is $115.00. determine the optimal quantity to produce and sell. At that level of operation. compute marginal cost, total cost. total variable cost, average total cost. average variable cost. Revenue and profits Compute the first two years of the study of a present luc for the following project. The initial investment is one million dollar. The life of the project is 7 years, depreciated with MACKS class 5 years. The salvage is 255.000. MARR is 15% and tax rate 35%. The project will have financial support of the bank of 40% of initial investment, payable yearly, with 10% interest rate for 5 years. saving per year are estimated at 450000 the first 5 years and 275000 the last two years.Explanation / Answer
ans 5
consumer equilibrium is determined where
MUa /Pa = MUb /Pb
-4qa+37 / 1 = 70-6qb / 2
-8qa+74 = 70-6qb
-8qa+6qb = -4
8qa- 6qb = 4........(1)
according to budget constarint
qa*Pa +qb *Pb =11
qa + 2qb =11.........(2)
solving equations, eq(1) +3 *eq(2)
11qa = 37
qa= 37/11
qa + 2qb =11
37/11 +2 qb = 11
2qb =11- (37/11) = (121 -37)/11 = 84/11
qb =84/22 = 42/11
qa= 37/11 and qb = 42/11 is bundle which will be consumed
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