Consider a consumer who consumes pizzas and soft drinks. The utility function is given by U (p, s) = pa. 8B, where p represents the quantity of pizzas consumed and S represents the quantity of soft drinks consumed, and a and B are positive constants representing the consumer's preferences for each good. Assume α = 2 and ẞ = 1. If the prices of pizzas and soft drinks are $10 and $2 respectively, and the consumer has $50 to spend, which of the following statements is wrong? The slope of the budget constraint indicates that for every extra soda drink the consumer buys, they must give up 5 pizzas. The slope of the budget constraint indicates that for every extra pizza that the
Consider a consumer who consumes pizzas and soft drinks. The utility function is given by U (p, s) = pa. 8B, where p represents the quantity of pizzas consumed and S represents the quantity of soft drinks consumed, and a and B are positive constants representing the consumer's preferences for each good. Assume α = 2 and ẞ = 1. If the prices of pizzas and soft drinks are $10 and $2 respectively, and the consumer has $50 to spend, which of the following statements is wrong? The slope of the budget constraint indicates that for every extra soda drink the consumer buys, they must give up 5 pizzas. The slope of the budget constraint indicates that for every extra pizza that the
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 19SQ
Related questions
Question
![Consider a consumer who consumes pizzas and soft drinks. The utility function is
given by U(p, s) = pa 8B, where p represents the quantity of pizzas
consumed and S represents the quantity of soft drinks consumed, and a and Bare
positive constants representing the consumer's preferences for each good.
Assume a = 2 and ẞ = 1. If the prices of pizzas and soft drinks are $10 and
$2 respectively, and the consumer has $50 to spend, which of the following
statements is wrong?
The slope of the budget constraint indicates that for every extra soda drink the
consumer buys, they must give up 5 pizzas.
The slope of the budget constraint indicates that for every extra pizza that the
consumer buys, they must give up 5 soda drinks.
If this consumer buys O soda drinks, their total utility will be 0.
If this consumer buys 1 pizza, their consumption of soda drinks will be 20.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0775b4a7-18c3-4763-9d79-efc65346ed7b%2F1e3e0baa-0044-466e-8493-483e9197f208%2Fs11bvxm_processed.png&w=3840&q=75)
Transcribed Image Text:Consider a consumer who consumes pizzas and soft drinks. The utility function is
given by U(p, s) = pa 8B, where p represents the quantity of pizzas
consumed and S represents the quantity of soft drinks consumed, and a and Bare
positive constants representing the consumer's preferences for each good.
Assume a = 2 and ẞ = 1. If the prices of pizzas and soft drinks are $10 and
$2 respectively, and the consumer has $50 to spend, which of the following
statements is wrong?
The slope of the budget constraint indicates that for every extra soda drink the
consumer buys, they must give up 5 pizzas.
The slope of the budget constraint indicates that for every extra pizza that the
consumer buys, they must give up 5 soda drinks.
If this consumer buys O soda drinks, their total utility will be 0.
If this consumer buys 1 pizza, their consumption of soda drinks will be 20.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 3 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613040/9781337613040_smallCoverImage.gif)
![Micro Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613064/9781337613064_smallCoverImage.gif)
![Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613040/9781337613040_smallCoverImage.gif)
![Micro Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613064/9781337613064_smallCoverImage.gif)
![Economics: Private and Public Choice (MindTap Cou…](https://www.bartleby.com/isbn_cover_images/9781305506725/9781305506725_smallCoverImage.gif)
Economics: Private and Public Choice (MindTap Cou…
Economics
ISBN:
9781305506725
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
![Microeconomics: Private and Public Choice (MindTa…](https://www.bartleby.com/isbn_cover_images/9781305506893/9781305506893_smallCoverImage.gif)
Microeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506893
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning