Use the prompt below to answer questions 19 – 21.  Suppose your utility function is: U(L,S) = LS, where L is the number of Cool Lime Starbucks Refreshers you consume per week and S is the number of Strawberry Acai Starbucks Refreshers you consume per week. 

Optional Extra Credit Question: This question is from “Sales of hand sanitizer are skyrocketing due to the coronavirus, leading to rationing and price hikes.” What were the consequences of a firm not estimating demand correctly?

Solve for the marginal utility for one more dollar spent on DPAC performances (x) AND the marginal utility for one more dollar spent on hockey games (y), when x=6 and y=21. The value for x is [ans1] and the value for y is [ans2].

The relationship between marginal revenue, total revenue, and own-price elasticity of demand can be illustrated by the equation:

Use the prompt below to answer questions 14 – 18. Consider the annual market demand function for Blueberry Pomegranate Vitamin Water.  

Using data for 48 million interactions over the first 24 weeks of last year from Uber’s four biggest U.S. markets – New York, San Francisco, Chicago, and Los Angeles – Steven Levitt (author of “Freakonomics”), researchers at the University of Chicago and Oxford, and Uber mapped out the Uber demand curve. They found that doubling fares reduces demand by around 40%. That’s why surge factors can be so large – reportedly up to 10 times on New Year’s Eve. It takes big price changes to prevent shortages. (WSJ, 9/19/16) Which of the following statements is true?

Write the marginal revenue function associated with this demand function when Y=32.42.

Consider the indifference map and budget constraints below. Assume the price of good Y is $5. Two points on the demand curve for good X are

Using your solution in Question 11, estimate how much Mackenzie Enterprises’s profit changes if the production constraint increases to 105 units. Include a description of this change (size and direction) in words. Solutions that re-solve the Lagrangian Function will not be considered.

If a firm produces at an output level where marginal profit is positive, it