Answer question 3 A: Key concepts1. What does it mean for preferences to be "complete"2. What does it mean for goods to be perfect compliments? Give one example.B: Theory: Budget constraints and preferences3. A consumer has a budget of £12 to split between two goods: good 1 has a price of 2, good 2has a price of 3. Write the consumer's budget constraint algebraically. Convert this budgetconstraint into the formula for the budget line. Show this line on a suitably labelled graph.4. The consumer's budget increases to £24. Show the effect of this change graphically.5. A consumer dislikes good 1, and dislikes good 2. Show these preferences on a suitablylabelled graph with an indifference curve. Label the graph: which areas would be preferredto those on the line?Section two-theory and policyC: French 35 hour working week6. In 1999, the French minimum wage was around 50 francs. Describe the (francs / hours ofleisure) trade-off for a French minimum wage worker algebraically and graphically, showingthe connection between the two. (Note: Assume there are 170 hours in a week.)7. The unemployment rate at the time was 10%, and a confederation of large businessescampaigned for a reduction in the minimum wage from 50 francs to 30 francs. How wouldthis affect the budget set of a minimum wage worker?

Budget constraints refers when a consumer's income restricts their purchase patterns. In other…

3. A consumer has a budget of £12 to split between two goods: good 1 has a price of 2, good 2 has a price of 3. Write the consumer's budget constraint algebraically. Convert this budget constraint into the formula for the budget line. Show this line on a suitably labelled graph.

3. A consumer has a budget of £12 to split between two goods: good 1 has a price of 2, good 2 has a price of 3. Write the consumer's budget constraint algebraically. Convert this budget constraint into the formula for the budget line. Show this line on a suitably labelled graph.

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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Question

Answer question 3

A: Key concepts
1. What does it mean for preferences to be "complete"
2. What does it mean for goods to be perfect compliments? Give one example.
B: Theory: Budget constraints and preferences
3. A consumer has a budget of £12 to split between two goods: good 1 has a price of 2, good 2
has a price of 3. Write the consumer's budget constraint algebraically. Convert this budget
constraint into the formula for the budget line. Show this line on a suitably labelled graph.
4. The consumer's budget increases to £24. Show the effect of this change graphically.
5. A consumer dislikes good 1, and dislikes good 2. Show these preferences on a suitably
labelled graph with an indifference curve. Label the graph: which areas would be preferred
to those on the line?
Section two-theory and policy
C: French 35 hour working week
6. In 1999, the French minimum wage was around 50 francs. Describe the (francs / hours of
leisure) trade-off for a French minimum wage worker algebraically and graphically, showing
the connection between the two. (Note: Assume there are 170 hours in a week.)
7. The unemployment rate at the time was 10%, and a confederation of large businesses
campaigned for a reduction in the minimum wage from 50 francs to 30 francs. How would
this affect the budget set of a minimum wage worker?

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A consumer’s budget set for two goods (X and Y) is 500 ≥ 4X + 5Y.a. The budget set is illustrated below. What are the values of A and B? The horizontal axis is labeled Good X. The vertical axis is labeled Good Y. A line begins at a point on the vertical axis goes down to the right and ends at a point on the horizontal axis. A = B = b. Does the budget set change if the prices of both goods double and the consumer’s income also doubles? multiple choice Yes, it rotates clockwise Yes, it shifts out from the origin Yes, it shifts in toward the origin No, it does not change c. Given the equation for the budget set, what are the prices of the two goods?Good X: $ Good Y: $ What is the consumer’s income? $
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