Problem 1
Denisa plays two sports: badminton b and golf g.
Her utility function is u(b, g) = bg.
Her budget is m = 4000 CZK per week.
Price per game: (pb, pg ) = (500, 500) CZK.
She used to maximize her utility constrained by her budget.
Now she has a new job with only 12 hours time for sports.
One game of golf takes 3 hours and one game of badminton 2 hours.
Did the number of games change because of the time constraint?
If yes, by how many?
1 / 4
Problem 2
Tereza drinks Czech beer b and french wine w.
Utility function: u(b, w) = b + 3w
Price of beer is pb = 30 CZK.
Her income is m = 100, 000 CZK.
She buys a rare wine: The total expenditure on w glasses of wine is w2.
How many glasses of wine does she buy?
2 / 4
Problem 3
Tereza still buys Czech beer and french wine.
Her demand for wine is q = 0.001m − 0.1pw , where pw is price of wine.
Price of beer is pb = 30 CZK.
Her income is m = 100, 000 CZK.
Last year she bought wine from a different produces at pw = 500 CZK.
This year the price has increased to pw = 600 CZK
What is the substitution and income effect of this price change?
3 / 4
Problem 4
Martin buys two unknown goods x and y.
His income was the same in 2015 and 2016.
Prices of x and y increased by 10%.
Martin bought more of good x and less of good y
What can we say about goods x and y?
4 / 4