Q3. Create your own question according to the information below.Using the budget constraint, Px*X + Py*Y = 1, assume that income is 100 TL. There is a pivoting tooutwards which takes us from budget constraint I, to budget constraint l,.a) Choose Y, Y, and X, by yourself. According tothese numbers, what will Px and Py be?Y =Y =X =Then, for 1, what isPx =Py =Then, for , what isPx =Py =X1b) Choose a combination of (X Y) on I, by yourself. Assume that X and Y are substitute products.According to this, choose your new position on , Le. new combination of (XY on . Explain why.combination of (X.Y) on I.new combination of (X.Y) on IExplanation:c) Use your combination of (XY) on 1, in (b). Assume that X and Y are complementary products.According to this, choose your new position onL.ie, new combination of (X.Y) on l. Explain why.combination of (X.Y) on I.new combination of (X.Y) onExplanation:E3SUDI

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03. Create your own question according to the information below. Using the budget constraint, Px*X + Py*Y = 1, assume that income is 100 TL. There is a pivoting to outwards which takes us from budget constraint I, to budget constraint l,. a) Choose Y, Y, and X; by yourself. According to these numbers, what will Px and Py be? Y = X = Then, for 1, what is Px = 12 Py = Then, for 1, what is Px = Py

03. Create your own question according to the information below. Using the budget constraint, PxX + PyY = 1, assume that income is 100 TL. There is a pivoting to outwards which takes us from budget constraint I, to budget constraint l,. a) Choose Y, Y, and X; by yourself. According to these numbers, what will Px and Py be? Y = X = Then, for 1, what is Px = 12 Py = Then, for 1, what is Px = Py

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Theory Of Consumer Choice

Section: Chapter Questions

Problem 1PA

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Mrs. Rochester earns $4500 a week and spends her entire income on computers andpastries, since these are the only two items that provide her utility. Furthermore, Mrs.Rochester insists that for every computer she buys, she must also buy a pastry. A) Suppose the price of pastries increases to $20 and income decreases to $3200. Whatis the new algebraic equation for Mrs. Rochester’s budget constraint? Show theimpact of the new budget line relative to the original budget line. B) What would be the new marginal rate of substitution that corresponds to theoptimal consumption choice? Interpret the marginal rate of substitution. D) Assume for this question only that when the price of computers decreases, less ofthat good is demanded. Illustrate the income and substitution effect of this pricedecrease.
Jordan eats two types of fruits – oranges and mangos. He has a budget of $60 to spend on fruits per month. The price of oranges is $4 per bag and that of mangos is $12 per bag. With this information, answer the questions below. Graph Jordan’s budget line by plotting oranges on the horizontal axis and find the slope of his budget line. State the budget equation for Jordan’s consumption of fruits (oranges on the horizontal axis). Suppose the price of oranges has doubled. Show this effect graphically (initial + new budget line) and calculate the slope of the new budget line (oranges on the horizontal axis). Suppose Jordan now reduces the money spent on fruits to $50. Show this budget line change on a graph (oranges on the horizontal axis; price of oranges is $4 and price of mangos is $12). (
Ravi has £21 to spend on pastries and biscuits. If he spends all the money on pastries, he can afford 15 pastries. The slope of Ravi’s budget line (assuming his pastries consumption is measured on the horizontal axis and his biscuits consumption is measured on the vertical axis) is -3.5 (3.5 in absolute terms). Calculate the price of a pastry and the price of a biscuit. Write down Ravi’s budget equation and draw the corresponding budget line. Mark the consumption bundle mentioned above. In your graph, clearly label the axes, the budget line, and calculate the coordinates of the points of intersection of the budget line with each axis. Interpret each of those points. Discuss how Ravi’s budget set would change if his budget doubles. Show the relevant changes graphically. How could the price of a pastry increase so that Ravi could still afford to buy 15 pastries? Discuss how Ravi’s budget constraint would change if the government imposed a tax of £0.50 per pastry and £0.50 per biscuit.
a. Suppose Fiona’s income is $100 per week, which she allocates between chocolates and books. Chocolates cost $2 each. Books cost $10 each if she purchases between 1 and 5 books. If she purchases more than 5 books in a week, the price falls to $5 for the 6th book and all subsequent books. Draw the budget constraint. Is it possible that Fiona might have more than one utility-maximizing solution? b. Confirm that if a consumer’s utility function is described by U = 2X + Y, and prices are px = 2 and py = 1, there is no unique utility maximizing solution regardless of income level. What does this tell you about X and Y as commodities? (Hint: draw a graph showing a budget constraint and indifference curve using the information provided.)
An individual utility function is given by U(x, y) = ½ x + 1 y. This individual budget constraint is 4 = 2 x + 1 y. At the point at which this individual maximizes her utility level, she buys how many unit(s) of x and how many unit(s) of y? Please explain the each step of how to solve this problem.
please urgent EXERCISE 2 Ravi has £21 to spend on pastries and biscuits. If he spends all the money on pastries, he can afford 15 pastries. The slope of Ravi’s budget line (assuming his pastries consumption is measured on the horizontal axis and his biscuits consumption is measured on the vertical axis) is -3.5 (3.5 in absolute terms). a) Calculate the price of a pastry and the price of a biscuit. Write down Ravi’s budget equation and draw the corresponding budget line. Mark the consumption bundle mentioned above. In your graph, clearly label the axes, the budget line, and calculate the coordinates of the points of intersection of the budget line with each axis. Interpret each of those points. b) Discuss how Ravi’s budget set would change if his budget doubles. Show the relevant changes graphically. How could the price of a pastry increase so that Ravi could still afford to buy 15 pastries? c) Discuss how Ravi’s budget constraint would change if the government imposed a tax of £0.50…
Suppose you have $30 and you are going to rent some movies and buy some sodas. Suppose movie rentals are $6.00 each and sodas are $1.00 each. Your original consumption bundle is 3 movies and 12 sodas. (Hint: put movie rentals on the X axis) a)Draw your budget line showing the different combinations of Movies that you can rent and sodas that you can purchase. b)Suppose that movie rentals turn out to be half off ($3.00). Draw your new budget line on the same graph.
Draw on a graph the original budget constraint (draw this in black) new budget constraint (draw this in green) compensated budget constraint (draw this in red) Also, on your graph, indicate the optimal bundle on each budget constraint. Label the optimal bundle on the original budget constraint X* and Y* Label the optimal bundle on the new budget constraint X** and Y** Label the optimal bundle on the compensated budget constraint XC and YC graph must be neat, accurate, and fully labeled. Make sure to label each budget constraint with the correct values of M, PX, and PY. Also make sure to identify the correct values of X and Y in each bundle. (Do not scale the Y-axis above 60, and do not scale the X-axis above 12.) i need help in terms od graphing this
Linda loves buying shoes and going out to dance. Her utility function for pairs of shoes, S, and the number of times she goes dancing per month, T, is U(S,T) = 2ST, so MUs = 2T and MUT = 2S. It costs Linda $50 to buy a new pair of shoes or to spend an evening out dancing. Assume that she has $500 to spend on shoes and dancing. A. What is the equation for her budget line? Draw it (with T on the vertical axis) and label the slope and intercepts. B. What is Linda's marginal rate of substitution? Explain. C. Use math to solve for her optimal bundle. Show how to determine this bundle in a diagram using indifference curves and a budget line.
Please can i get help with the illustrating the graphs? An individual has a utility function, U(x, y) = x ∙ y, with a budget constraint, 120 = 2x + y.(a) Derive the individual’s optimal consumption for x and y, as well as the utility level associated with them. Graph the utility function and budget line. Indicate the point corresponding to your answer.(b) Evaluate the price effect when the budget constraint changes to 120 = 4x + y, specifying the income and substitution effect. Illustrate these on the graph indicating the points corresponding to your answer.(c) Based on (b), what type of goods are x and y?
Carol needs to decide how to spend her wealth on fish and chicken. For Carol, 1 lb of fish is equivalent to 2 lb of chicken. Her preferences can be represented by the utility function u(x; y) = 2x + y where x is the quantity of fish (in lbs) and y is the quantity of chicken (in lbs). The consumption set is R2+. a) Suppose now that the price of fish increases to $2 per pound. Draw Carol's budget set, labeling the slope and the intercept points clearly. How much fish and chicken will Carol choose to purchase? b) Suppose that Carol goes to a different supermarket where the price of fish is Px > 0 (in dollars per pound of fish) and the price of chicken is Py > 0 (in dollars per pound of chicken). Find Carol's demand for fish as a function of the prices Px and Py . You can assume that she still has $20 to spend. Assume that the price of chicken is Py = 1. Draw Carol's demand function for fish as a function of the price of fish (Px) in a diagram with the quantity of fish on the…
A consumer has income of $3,000. Wine costs $3per glass, and cheese costs $6 per pound. Drawthe consumer’s budget constraint with wine onthe vertical axis. What is the slope of this budgetconstraint?