Use the prompt below to answer question 22. Consider the following demand function and related statistics for generic-brand house paint:

Optional Extra Credit Question: The real-world application article, “Kroger vs. Walmart vs. Aldi: Which is the Cheapest Grocery Store?” argues that Aldi customers maximize utility because this store

Re-solve the optimal bundle if the price of a Cool Lime Starbucks Refresher (L) increases to $3. You may assume no change in your income or the price of a Strawberry Acai Starbucks Refresher (S). Enter the values for L and S. The value for L is [ans1] and the value for S is [ans2].

Suppose the market supply function is . Calculate own-price elasticity of demand at market equilibrium when = 32.42.  When necessary, round your final solutions to two places after the decimal. Own-price elasticity of demand at market equilibrium when Y = 32.4 is [ans1].

If Mackenzie Enterprises can produce a total of 100 units of the two products together, use the Lagrangian Method to find the combination of X and Y that maximizes profit. DO NOT round your solution at any time. The value for X is [ans1] and the value for Y is [ans2].

PART III (extra credit, 3 points total)

Consider the indifference map and budget constraints below:   Suppose the representative consumer allocates income towards goods X and Y. Based on this consumer’s budget constraint and indifference map, what is income if the price of good Y is $5? What is the price of good X when the optimal quantity of good X is 5 units?

Using both prices and optimal bundles derived in questions 19 – 20, solve for the equation for the demand curve for Cool Lime Starbucks Refreshers (L). Assume the demand curve is linear.

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?