Economics

Managerial Economics. 1) Brid repulse has a limited income and consumes only wine-colored and higher(prenominal) mallow; her current phthisis choice is four bottles of wine and 10 pounds of stop. The price of wine is $10 per bottle, and the price of high mallow is $4 per pound. The subsist bottle of wine added 50 units to Bridgets proceeds, smear the remainder pound of high mallow added 40 units. (a)Is Bridget making the avail maximizing choice? why or Why non? no(prenominal) Bridget is not making the good maximizing choice. At benefit maximizing combination, the marginal utility per unit of silver fagged is equal for each good. MU wine = 50 Pwine = 10 So, fringy utility per unit of money for wine =MU wine / Pwine = 50/10 = 5.00 MU cheese = 40 Pcheese = 4 So, Marginal utility per unit of money for cheese= MU cheese / Pcheese = 40/4 = 10.00 Since the two are not equal, we are not at the utility maximization point. (b)If not, what should she do instead? Why? She should cast up the using up of cheese. As she increases the consumption of cheese, the marginal utility from the at abide unit of money spent on cheese get out decrease from 10. At the same time, she should decrease the consumption of wine.

As she is decreasing the consumption of wine, the marginal utility from the break unit of money spent on wine forget increase from 5. She should continue doing so till the utility derived from the last unit of money spent on wine and cheese are equal. 2) In an article about the financial problems of the States Today, Newsweek inform that the piece was losing about $20 million a year. A Wall ! Street analyst said that the paper should salary increase its price from 50 cents, which he estimated would bring in an additive $65 million a year. The papers publishing house rejected the idea, saying that circulation could drop sharply by and by a price increase, citing the wall street journals experience after it increased its price to 75 cents.  What hard assumptions are the publisher and the analyst making about price...If you completion to get a full essay, order it on our website: OrderCustomPaper.com

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