Economics

Managerial Economics. 1) Brid crap has a limited income and consumes only wine-colored and graduate(prenominal) mallow; her current phthisis choice is four bottles of wine and 10 pounds of stop. The price of wine is $10 per bottle, and the price of high mallow is $4 per pound. The subsist bottle of wine added 50 units to Bridgets proceeds, enchantment the remainder pound of stop added 40 units. (a)Is Bridget making the improvement maximizing choice? why or Why non? none Bridget is not making the service program maximizing choice. At public-service corporation maximizing combination, the marginal utility per unit of silver dog-tired is equal for each good. MU wine = 50 Pwine = 10 So, fringy utility per unit of money for wine =MU wine / Pwine = 50/10 = 5.00 MU cheese = 40 Pcheese = 4 So, Marginal utility per unit of money for cheese= MU cheese / Pcheese = 40/4 = 10.00 Since the two are not equal, we are not at the utility maximization point. ( b)If not, what should she do instead? Why? She should adjoin the use of goods and services of cheese. As she increases the consumption of cheese, the marginal utility from the finish unit of money spent on cheese get out decrease from 10. At the same time, she should decrease the consumption of wine.

As she is decreasing the consumption of wine, the marginal utility from the buy the farm unit of money spent on wine give increase from 5. She should continue doing so till the utility derived from the stand firm unit of money spent on wine and cheese are equal. 2) In an article about the financial problems of the States Today, Newsweek report that th! e piece was losing about $20 million a year. A Wall Street analyst said that the paper should rhytidoplasty its price from 50 cents, which he estimated would bring in an spare $65 million a year. The papers paper rejected the idea, saying that circulation could drop sharply by and by a price increase, citing the wall street journals experience after it increased its price to 75 cents.  What surd assumptions are the publisher and the analyst making about price...If you process to get a full essay, order it on our website: OrderCustomPaper.com

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