Consumer Theory and Budget Line

__D___ 20. Brandon needs $480 to buy a TV and stereo system for his room. He received $60 in cash for birthday presents. He plans to save $30 per week from his part-time job. To find how many weeks w it will take to have $480, solve 60 + 30w = 480. Type your answer in the blank to the left.

3. The price elasticity of demand increases with the length of the period considered simply because ( )

You just won a $100 shopping spree at a store that sells only DVDs and CDs. You are trying to determine what combination of these two goods would maximize your utility. The price of CDs is $10 and DVDs are $20. Below is the total utility you receive from consuming these goods.

II.|Connie has an investment portfolio in excess of $450,000. She pays Chris $350 to do an analysis of her investments and make recommendations on restructuring the portfolio.|

Determine the utility-maximizing combination of x and y if his income decreases by $60. What is his marginal utility of money equal to at this lower income level?

2. If a car rental company charges $100 for each rental, a dollars per mile, and b dollars per hour, which of the following represents the total cost to rent a car for 6 hours and travel 250 miles? 100 + 250a + 6b

Tendency to change your purchase based on changes in relative price is called the substitution effect.

Kent Christy is organizing a fundraiser for the pool he manages. He bought ice-cream cones ($.75) and ice-cream sandwiches ($1.00) to sell. His total bill was $225. (a) If he ordered twice the number of ice-cream cones than ice-creamsandwiches, how many of each did he buy? (b) What did he spend for ice-cream cones? (c) What did he spend for ice-cream sandwiches?

Therefore, Elaine's expectations for birth control sponges effects her demand curve and the supply curve does not change. This leads her to buy more sponges. Lastly, her tastes also is a factor in her demand. In consumers and supplier must expect the

c. Ignore part (b). Suppose government spending (G) increases by 10. What is the new level of equilibrium income?

In second degree price discrimination, price varies in according to quantity demanded. Within some markets, each consumer purchases many units of the good over any given period, and the consumer 's demand declines with the number of units purchased. In this situation, a firm can discriminate according to the number consumed. This is

b. Lowering the price of the product to make it a viable substitute to the refrigerated and frozen pizza market - margin policy to retailers may be tweaked.

1. Explain and give examples of the Consumption Function, Autonomous Consumption, and Marginal Propensity to Consume.

Income effect is when the income changes and it results in the change of the quantity demanded. In this situation we observe a rise in disposable income that will consequently increase the purchasing power of the households that means individuals can purchase more than before. This means that an increase in income results in increase of the demand if the good is a normal good like food & beverages. Normal good is a good for which the demand is increasing when the consumer’s income is rising and vice versa. Moreover, a change in income prompts the consumer to choose a new optimal bundle. The income effect of a rise in price can be negative or positive, depending on whether the good X is. Policy 1 does not have any substitution effect, it is a pure income effect. Graphs are illustrated in Appendix A17 Figures 4,5,6. The x1 and x2 values for policy 1 in comparison with no policy are nearly same that distinctly proves the fact that the net effectiveness of this policy is 0.

B. The increase in production costs (increasing domestic and foreign raw materials prices, rising production costs ) leads to a rise in prices.