22. Suppose a little girl likes peanut butter and jelly sandwiches with exactly 2T of jelly and 1T of peanut butter. Suppose further that her mom agrees to make sandwiches to those exact specifications and the price of peanut butter is $.25/T and the price of jelly is S.10/T. If she has $1.80 to spend on peanut butter and jelly ingredients (ignore the bread) in a week, how many sandwiches will she make? a. 1 ь. 2 c. 4 d. 8

22. Suppose a little girl likes peanut butter and jelly sandwiches with exactly 2T of jelly and 1T of peanut butter. Suppose further that her mom agrees to make sandwiches to those exact specifications and the price of peanut butter is $.25/T and the price of jelly is S.10/T. If she has $1.80 to spend on peanut butter and jelly ingredients (ignore the bread) in a week, how many sandwiches will she make? a. 1 ь. 2 c. 4 d. 8

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter6: Demand Relationships Among Goods

Section: Chapter Questions

Problem 6.3P

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2. David gets $3 per week as an allowance to spend any way he pleases. Since he likes only peanut butter and jelly sandwiches, he spends the entire amount on peanut butter (at $0.05 per ounce) and jelly (at $0.1 per ounce). Bread is provided free of charge by a concerned neighbor. David is a picky eater and makes his sandwiches with exactly 1 ounce of jelly and 2 ounces of peanut butter. He is set in his ways and will never change these proportions. a) How much peanut and jelly will David buy with his $3 allowance per week? b) Suppose the price of jelly increases to $0.15 per ounce. How much of each commodity would be bought? c) By how much should David’s allowance be increased to compensate for the rise in the price of jelly in part b? d) Graph your results of part a through part c. 1 e) In what sense does this problem involve only a single commodity? Graph the demand curve for this single commodity. f) Discuss the results of this problem in terms of the income and substitution…
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H7. Consider an economy consisting of two consumers, Adam and Eve. There are two goods, apples and bananas. Adam likes apples and prefers more apples to less. He somewhat likes bananas: he prefers one banana to none, but is indifferent between having one banana and having more than one banana (i.e., he gets satiated with bananas after having one banana). Eve likes bananas and prefers more bananas to less; she is indifferent to apples. There are exactly 5 apples and 4 bananas available in this economy. Describe all Pareto optimal allocations in this economy. Explain.