2) Suppose you have $400 that you can spend on goods 1 & 2. If the price of good 1 is $40, while the price of good 2 is $80, draw a budget line to illustrate your budget constraint (place good 1 on the horizontal and good 2 on the vertical axis). Make sure you label the axes. Also, calculate the slope of this budget line. Slope =
Q: Which panel in the figure shows the effect on the budget line of a decrease in apples, all else…
A: A budget constraint represents the ability of consumer to buy the goods at the current prevailing…
Q: A person has $ 100 to spend on two goods X and Y whose respective prices are $3 and $5. a. Draw the…
A: The budget line is a graphical measure of all feasible combinations of two goods (X and Y) that an…
Q: Suppose you have $48 to spend on the two items in the graph below. Q books 4 A 1 2 6 8 Q…
A: If movie costs $8 line B represents my budget constraint. If books costs $12 line B represents my…
Q: 1. Suppose a consumer has a budget for fast-food items of $20 per v.zek and spends this money on two…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: Refer to Figure 3-1 in Question 16. Assume the situation starts as in the previous problem (Inco…
A: Utility maximizing condition is determined by the condition of tangency. The slope of Budget…
Q: The figure shows Laura's budget line. Laura buys only lilies (Y) and orchids (X). Lilies (number per…
A: People can spend their income on different goods and services. The amount spends on each good…
Q: Question 7: For each of the following price-income scenarios, sketch the con- sumer's budget lines…
A: Budget line: 1) BL1: 70=5q1+10q22) BL2: 70=10q1+10q23) BL3: 140 =10q1+10q2
Q: How much does orange juice cost
A: Budget refers to the total amount of funds one has to make consumption expenditure.
Q: 8. Suppose that you are able to consume only two goods, coffee and donuts. Use a graphical and…
A: The consumer is in equilibrium when he gets maximum satisfaction out of his expenditure. When the…
Q: Scenario: Suppose that you are on a desert island and possess exactly 20 coconuts. Your neighbor,…
A: 1)There are 2 budget lines in this example. Budget line trading with friday has the limit upto 20…
Q: 1. A consumer decides not to buy a VCR when her income is $20,000. However, when her income rises to…
A: Initially the consumer had lower income. So his budget line can be shown by AB. At lower budget…
Q: Linda loves buying shoes and going out to dance. It costs Linda $50 to buy a new pair of shoes or to…
A: The budget line is the graphical representation of all the possible combinations of two different…
Q: 2. Suppose a consumer has a fixed budget of $200, and she spends it all on two goods, x1 and x2. The…
A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: Andrea has a budget of £21 to spend on toothbrushes and tooth paste. He does not receive any utility…
A: Budget constraint represents different combinations of two commodities that consumers can purchase…
Q: Joe's budget constraint equals 500 = 2F + 100S, where $500 is Joe's income, $2 is the price of food…
A: Budget constraint shows combinations of two goods that can be bought with the given level of income.
Q: Breakdown the shift from the original point of consumption to the new point of consumption using the…
A: The income effect measures the change in quantity consumed due to the change in the purchasing power…
Q: 7- Define the budget constraint and what does the slope of the budget constraint represent?
A: In Economics, budget is defined as a spending plan which is based upon the income and expenses of a…
Q: substitution effect: Suppose the price of sausage doubles, the substitution effect will lead her to…
A: Consumers choose the goods according to the price and their budget constraint, if the price of goods…
Q: - The theory of consumer choice examines the tradeoffs inherent in decisions made by consumers. For…
A: This question elates to the topic budget constraint, which can be explained as the limit to the…
Q: 1. Suppose that indifference curves are described by straight lines with a slope of −b. Given…
A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: Explain how a consumer budget and product price changes impact the budget line by drawing…
A: The budget line explains the combination of products to be selected till the last money of budget is…
Q: a. Susan has the option to purchase eyeglasses, E, $3 each, and orange juice, O, $1 each. Her income…
A: Budget line shows different combinations of two goods that can be bought with the given level of…
Q: In Exhibit1 assume that the price of hamburgers is $2 each, fries cost 50 cents each, and Cokes cost…
A: Quantity Total Utility from Hamburgers (utils) Total Utility from Fries (utils) Total Utility…
Q: Joe's income is $1000, the price of pizza (P) is $10 per unit, and the price of burger (B) is $8.…
A: Budget constraint: It shows all the feasible combinations of goods and services that can be…
Q: A student has a monthly budget of $120 to spend on either burritos, which cost $6 each, or sodas,…
A: Budget constraint refers to all possible points of consumption where the consumer utilizes its full…
Q: Andrea has a budget of £21 to spend on toothbrushes and tooth paste. He does not receive any utility…
A: Utility refers to the total amount of satisfaction that derived from the consumption of goods and…
Q: Which budget constraint panel in Figure below shows the combined effects of an increase in the price…
A: Changes in prices lead to shift in budget curve If price increases it reduces the purchasing power…
Q: 10. Assume an individual's preferences are represented by the following indifference map and he has…
A: Income = 400 Price of Good1 = $20 Price of Good 2 Originally = $10 Price of Good 2 Changes to = $16…
Q: 18 points) Suppose you have $30 and you are going to rent some movies and buy some sodas. Suppose…
A: Two goods - movies (M) and sodas (S) Total income = $30 Cost of movie = $6 Cost of soda = $1…
Q: A budget constraint line represents the different combinations of two goods that will yield the…
A: The budget set (all bundle options on or below the budget line) shows all potential bundles of…
Q: 1. How does a consumer’s optimal choice of goods change if all prices and the consumer’s income…
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: ii. What is the slope of the budget constraint? Are the following combinations of goods in the…
A:
Q: Which budget constraint panel in Figure below shows the combined effects of an increase in the price…
A: Herez given budget constraints shows the quantity of oranges on y-axis and quantity of apples on…
Q: If the price of the good (X) is OR 14 and the price of the good (Y) is OR 8.8, what is the slope of…
A: A budget line illustrates the combinations of two goods that can be purchased with a given amount of…
Q: Suppose the price of a donut is $2.50, the price of a cinnamon roll is $3.20, and the budget is $50.…
A: The budget line represents the combination of the two goods that can be purchased with the given…
Q: PROBLEM (1) Suppose a consumer has just enough money to afford the bundle of 3 apples and 2 oranges,…
A: Utility refers to the amount of satisfaction that a consumer receives from the consumption of a good…
Q: 32/ Assume that a consumer has a given budget or income of $24 and that she can buy only two goods,…
A: Answer in step 2.
Q: The budget constraint for a consumer who only buys apples (A) and bananas (B) is PAA + PBB = I where…
A: A consumer maximizes his utility by consuming at a point where the budget constraint of the…
Q: Picture 1 : A college student has two options for meals: eating at the dining hall for $6 per meal,…
A: The total income of that student is $60. She spends equal amount on both the goods. Thus, she will…
Q: John has $300 as income and he uses his income only for apples and bananas. If he uses his income…
A: Budget line is the two goods possible combinations that a consumer can buy with given level of price…
Q: a) Suppose a consumer has a budget for fast-food items of $20 per week and spends this money on two…
A: Budget line refers to the line that shows the combination between two goods that can be purchased…
Q: Linda loves buying shoes and going out to dance. It costs Linda $50 to buy a new pair of shoes or to…
A: Linda has $500 to spend of shoes and dancing. It cost Linda $50 to buy a new pair of shoes or to…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
- True or false with reasoning: 1) _______When we claim that utility can be ordinally measured, we assume that the consumer is able to measure the total and marginal utility received when one extra unit of a commodity is consumed. 2)_______If MRS between two goods is constant, then having more of one good without having more of the other does not increase utility. 3)_______Marginal Utility increases until total utility is at a maximum and then marginal utility decreases.Question 3 Mrs. Griffiths earns $5000 a week and spends her entire income on dresses and handbags, since these are the only two items that provide her utility. Furthermore, Mrs. Griffiths insists that for every dress she buys, she must also buy a handbag. - What is the algebraic equation for Mrs. Griffiths budget constraint if dresses cost $25 each and handbags cost $14 each? How many of each good will she buy and represent this on a budget line with handbags on the horizontal axis. - Draw an indifference curve showing the optimum choice. Label the optimum as point A. What would be the marginal rate of substitution at the point that corresponds to the optimal consumption choice? Interpret the marginal rate of substitution. - Suppose the price of a dresses increases to $200 and income decreases to $4200. What is the new algebraic equation for Mrs. Griffiths budget constraint? Show the impact of the new budget line relative to the original budget line. - What would be the new marginal…1 . Assume the budget constraint and the indifference curves are both linear. Assume the consumer is willing to tradeoff 1 of good X for 1 of good Y. If the relative price of one additional good X is giving up 1/2 of good Y, then the optimal bundle of the two goods is? Assume the budget constraint and the indifference curves are both linear. Assume the consumer is willing to tradeoff 1 of good X for 1 of good Y. If the relative price of one additional good X is giving up 1/2 of good Y, then the optimal bundle of the two goods is? Assume the government imposes an effective minimum wage (i.e., one above the equilibrium wage rate that would otherwise prevail in that market). Our supply and demand analysis implies? If preferences for pizza increase and the price of labor to produce pizza decreases, the equilibrium quantity of pizza will ____ and the equilibrium price of pizza will _____ .? Assume an intertemporal budget constraint that shows how consumption can be traded off between…
- 1. Assume well behaved preferences for a consumer. If total income goes up, ceteris paribus what would be the impact on the Budget line? 2. Assume well behaved preferences for a consumer. If total price of good on Y axis goes up, ceteris paribus what would be the impact on the Budget line? 3. Differentiate between the concept of Income effect and Substitution effect in Price DecompositionQ2. You drink only Coffee or Orange juice Price of Coffee (dollars per cup) Marginal Utility of Coffee (for 1st cup) Price of Orange Juice (dollars per glass) Marginal Utility of Orange Juice (for 1st glass) $3 60 $2 50 c) If you have 1 cup of Coffee and 1 glass of Orange juice, are you in Equilibrium? Explain briefly. d) If not, how should you change your consumption of these 2 items?7. A consumer has preferences for coffee and pancakes that are complete, continuous, transitive, monotonic, and convex. At her current consumption bundle on the budget line, you could take away a maximum of 2 cups of coffee if you give her 5 extra pancakes without changing her utility. The price of a cup of coffee is $4, and the price of a pancake is $1. Assume you graph pancakes on the X-axis and coffee on the Y-axis. At the current consumption bundle, the bang per buck is higher for pancakes than coffee, and the consumer’s indifference curve is flatter than her budget line. a. True b. False Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
- 4 Assume that a person's utility over two goods is given by U(g1; g2) = g1 + ln g2. The price of good g1 is equal to p1 and the price of good g2 is p2. The total income of the individual is given by I. The marginal rate of substitution between g1 and g2 is given by 1/(1/g2). Then, the expressions for this person's (1) budget constraint, (2) budget line's slope (assume that, graphically, g1 is on the horizontal axis and g2 on the vertical axis), and (3) the person's demand function for g2 (that is, g2 as a function of price ratio) are respectively:1. What is the slope of the consumer’s budget line? Interpret economically.2. Graph the budget line showing all the different combinations of good ? (drawn on the horizontal axis) and good ? (drawn on the vertical axis) that can be bought given the consumer’s total income. In the graph, indicate the y-intercept and x-intercept of the budget line.Picture 1 : A college student has two options for meals: eating at the dining hall for $6 per meal, or eating a package of Cup O' Soup for $2 per meal. Her weekly food budget is $60. Assume that she spends equal amounts on both goods. On the following graph, use the green line (triangle symbol) to draw the college student's budget constraint. Then use the black point (plus symbol) to indicate the initial optimum in this case. Picture 2 : Suppose the price of a Cup O' Soup now rises to $3. Assume that the student now spends only 20 percent of her income on dining hall meals. On the preceding graph, use the blue line (circle symbol) to draw the college student's new budget constraint. Then use the grey point (star symbol) to indicate the new optimum in this case. As a result of this price change, the quantity of Cup O' Soup packages consumed ( decreased , increase ) ? This means that Cup O' Soup must be (a normal , an inferior) ? good, and the income effect (…
- 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.)Q1 please help me quickly!! Your budget is $200. The price of good 1 (x1) is $4 per unit, and that of good 2 (x2) is $3 per unit. Then, the equation for your budget line can be written as O 5x1 + 3x2 = 200 ◎ 4x1 + 3x2 = 200 ◎ 4x1+ 4x2 = 200 O 5x1 + 3×2 = 195You are choosing between two goods, X and Y, and your marginal utility from each is as shown in the table below. If your income is $9 and the prices of X and Y are $2 and $1, respectively, what quantities of each will you purchase to maximize utility? What total utility will you realize? Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase? Using the two prices and quantities for X, derive a demand schedule (price–quantity-demanded table) for X.
