Suppose That the Preferences a Typical American Has for Quantities

question 112

Essay

Suppose that the preferences a typical American has for quantities of electricity (E)and gasoline (G)is given by
U(E,G)= a ln(E)+ (1 - a)ln(G)
where 0 < a < 1.Suppose the prices of gasoline and electricity in the units provided are both $1/unit and the consumer has an income of $100.Suppose in addition,the government has chosen to ration electricity by allowing a maximum consumption of 50 units of electricity (E ≤ 50).
a.If a = .25,find the optimal consumption bundle of gasoline and electricity.Does the electricity rationing constraint have an influence on consumer's choice?
b.If a = .75,find the optimal consumption bundle of gasoline and electricity.Does the electricity rationing constraint of the government have an influence on the consumer?

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Definitions:

Multiple Facilities

Organizations or establishments having several physical locations or amenities designed for specific functions or services.

Webinars

Online seminars that allow for interactive participation and are designed to educate or inform a remote audience.

Telepresence

Technology that allows a person to feel as if they are present, to give the appearance of being present, or to have an effect, at a location other than their own.

Team Meeting

A gathering of team members to coordinate actions, share updates, and strategize on projects, essentially a synonym for Group Meetings.