Question;Ms. Sarah Traveler does not own a car and travels only by bus, train, or plane. Her utility function is given by U (b, t, p) = b? t? pwhere each letter stands for miles traveled by a specific mode. Suppose that the ratio of the price oftrain travel to that of bus travel pt/pb never changes.(a) How might one define a composite commodity for ground transportation?(b) Phrase Sarah?s optimization problem as one of choosing between ground g and air p transportation.(c) What are Sarah?s demand functions for g and p?(d) Once Sarah decides how much to spend on g, how will she allocate those expenditures between b and t?
Paper#56329 | Written in 18-Jul-2015Price : $19