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:

Prejudice

Preconceived opinion that is not based on reason or actual experience; bias.

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The extent to which a leader is able to achieve organizational or team objectives through the direction, motivation, and guidance of others.

Gender Differences

Variations in characteristics, behaviors, or attributes between males and females, often influenced by cultural, social, and biological factors.

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