Need help with Econ homework!

#1 09-25-2005, 11:41 PM

I need to know what Abe Lincoln meant when he said the following: "The plainest print cannot be read through a gold eagle." (in an economic sense)

Also, if U = 2b+4c, and income is $60 per month, and good B costs $2, good C costs $3, how much of good B and C do I buy (if im a utility maximizer)???

THANKS!

-Lost and Ashamed

2+2 wannabe · #2 09-25-2005, 11:46 PM

do you know about the Langrangian method? use it

edit: where do b and c come in to play? should they be A and B?

MyTurn2Raise · #3 09-25-2005, 11:48 PM

don't buy 'A', it's not even in your utility function

tonypaladino · #4 09-25-2005, 11:48 PM

fluh?

Thythe · #5 09-25-2005, 11:49 PM

[ QUOTE ]
don't buy 'A', it's not even in your utility function

[/ QUOTE ]

Yeah exactly. Ok on my next post I"ll assume is was "a" and "b" in the function.

Bradyams · #6 09-25-2005, 11:50 PM

Wow, I'm so glad I don't have to take those types of classes.

#7 09-25-2005, 11:51 PM

fixed, my bad, and THANKS

Thythe · #8 09-25-2005, 11:51 PM

[ QUOTE ]

Also, if U = 2b+4c, and income is $60 per month, and good A costs $2, good B costs $3, how much of good A and B do I buy (if im a utility maximizer)???

[/ QUOTE ]

I'm assuming U really equals 2a + 4b. So basically good A gives you 2 utility per item and costs $2 so you get 1 utility per dollar. Good B costs 3 dollars and gives you 4 utility so that's 4/3 utility per dollar, which is much better. So...you buy 20 of good b for a utility of 80.

2+2 wannabe · #9 09-26-2005, 12:01 AM

[ QUOTE ]
do you know about the Langrangian method? use it

[/ QUOTE ]

after actually seeing the question it's way easier to use intuition with a simple utility formula like this

jdl22 · #10 09-26-2005, 12:01 AM

Buy 20 units of good C.

On the margin you get twice the utilty from consuming c while it only costs 1.5 times the price so you'll buy all of good c. With linear utility functions it's easy and not unlike <font color="white"> pot odds calculations </font>:
take the coefficient on each good and divide by its price. Consume all of whichever ratio is greater.

edited to add: why the hell didn't you use your regular account? It's not that embarrassing, a guy made a thread about removing his genital warts for crying out loud.