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Which of the following is NOT a valid monotonic transformation of the utility function ?

Sophia has the following utility function for iced coffees () and handbags (): . Sophia has $900 to spend on iced coffees and handbags each month. The initial price of an iced coffee is $5 and the initial price of a handbag is $100. Suppose the government imposes a 15% ad valorem tax on handbags.

The market demand for a good is computed by summing all individual demand curves.

Ninaka’s preferences depend on magic markers and watching Disney movies. Based on Ninaka’s indifference curves we can conclude that magic markers are considered to be a(n) _______ and watching Disney movies is considered to be a(n) ________.

(a) Set up the Lagrangian for Sophia’s utility maximization problem prior to the tax.

(d) Derive Sophia’s Hicksian demand functions for iced coffee and handbags.

(e) Compute the total effect, substitution effect, and income effect for iced coffees and handbags. Round your answers to the nearest hundredth.  Iced Coffees: TE: [coffeete] SE: [coffeese] IE: [coffeeie] Handbags: TE: [handbagste] SE: [handbagsse] IE: [handbagsie]

The following indifference map represents Vlad’s consumption of eggs () and Legos () Bundle A is Vlad’s initial optimal bundle of eggs and Legos. Bundle B is Vlad’s optimal bundle after the price of  eggs decreases. For Legos, the income effect is a(n) ________ of ________ Legos. We can conclude that Vlad considers Legos to be a _________ good.

Quantity and ad valorem taxes increase the price of the good and change the slope of the budget line.

George chooses between nights in Paris () and guided museum tours (). At a particular consumption bundle, George’s marginal rate of substitution of nights in Paris for guided museum tours is