Problem 1
August consumes hamburgers H and ice cream I.
His utility function is U(H, Z) = H2 + 2I.
Prices: pH = 50 and pI = 25 CZK.
His income is 300 CZK.
What is the optimal consumption of H and I?
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Problem 2
Mar´ıa consumes tacos T and nachos N.
Her utility function is u(T, N) = min{T + 2N, 2T + N}
Her income is 20 CZK.
a) What is her optimal bundle if pT = 2 and pN = 3
b) What is her optimal bundle if pT = 1 and pN = 3
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Problem 3
Thomas spends 2 000 CZK on tennis trainings.
His rich uncle offers him to
• pay him an allowance of 500 CZK per weak,
• or to subsidize a quarter of his weakly training costs.
Thomas has no kink in his IC, and trainings are a normal good for him.
Does he prefer the allowance of the subsidy?
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Problem 4
Hana spend or her income on economics textbooks E and other goods y.
Her income is 30 000 CZK per month.
An average economics textbook costs 1 000 CZK.
At this price she buys 10 textbooks.
Suppose all textbooks are free, but there is a tuition fee of 14 000 CZK per
month. Does this change make Hanka better off?
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