Suppose the only characteristic of beer that a consumer cares about is alcohol content.Currently,Bud Light and Miller Lite have the same alcohol content.
a.Using
$x _ { 1 }$ to denote ounces of Miller Lite and
$x _ { 2 }$ to denote ounces of Bud Light,what's the simplest possible utility function that can describe this consumer's tastes over the two products.
b.Suppose Bud Light lowers its alcohol content by 50%.How would you change the utility function to account for this?
c.Derive the MRS for the functions in (a)and (b)--- and interpret your answer.

Question

Suppose the only characteristic of beer that a consumer cares about is alcohol content.Currently,Bud Light and Miller Lite have the same alcohol content.
a.Using
 $x _ { 1 }$ to denote ounces of Miller Lite and
 $x _ { 2 }$ to denote ounces of Bud Light,what's the simplest possible utility function that can describe this consumer's tastes over the two products. 
b.Suppose Bud Light lowers its alcohol content by 50%.How would you change the utility function to account for this?
c.Derive the MRS for the functions in (a)and (b)--- and interpret your answer.

Quizplus · Accepted Answer

The Answer of Suppose the only characteristic of beer that a consumer cares about is alcohol content.Currently,Bud Light and Miller Lite have the same alcohol content.
a.Using
 $x _ { 1 }$ to denote ounces of Miller Lite and
 $x _ { 2 }$ to denote ounces of Bud Light,what's the simplest possible utility function that can describe this consumer's tastes over the two products. 
b.Suppose Bud Light lowers its alcohol content by 50%.How would you change the utility function to account for this?
c.Derive the MRS for the functions in (a)and (b)--- and interpret your answer.

Suppose the Only Characteristic of Beer That a Consumer Cares x1x _ { 1 }x1​

Suppose the Only Characteristic of Beer That a Consumer Cares $x _ { 1 }$