4.Suppose a cup of coffee at the campus coffee shop is $2.50 and a cup of hot tea is $1.25. Suppose a student's beverage budget is $20 per week. What is the algebraic expression of the budget? * D (1.5 Points) 20=2SC+12ST 20=25 C O 20=1.ST 15C 2.50
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- A student has a monthly budget of $120 to spend on either burritos, which cost $6 each, orsodas, which cost $4 each.What is the largest number of burritos that the student could afford to purchase in onemonth?What is the largest number of sodas the student could afford to purchase in one month? Draw the student's budget constraint. Put burritos on the x-axis and sodas on the y-axis.12)Suppose a consumer has $100 to spend on two goods, shoes and shirts. If the price of a pair of shoes is $20 per pair and the price of a shirt is $15 each, which of the following combinations is unaffordable to the consumer? A) 0 pairs of shoes and 0 shirts B) 2 pairs of shoes and 4 shirts C) 5 pairs of shoes and 0 shirts D) 0 pairs of shoes and 7 shirts E) 2 pairs of shoes and 3 shirtsQuestion 2 David spends his budget on chocolate and chip. His utility function is given by ?(?1,?2)= 2?1?2, where ?1 is the number of chocolates he consumers per week, and ?2 is the number of chips he buys per week. A chocolate costs 10 SEK, and a chip costs 20 SEK. David’s weekly budge for consuming on these two goods is 120 SEK. (1) What is David’s budge line? Draw the budget line on a graph with chocolate amounts on the horizontal axis and chip amounts on the vertical axis. Write explicitly at which points budget line crosses the axis. (2) What is David’s marginal utilities for the two goods, respectively? What is his marginal rate of substitution between the two goods? (3) What is David’s optimal choice? Calculate the numerical answer for the optimal bundle. Also draw an indifference curve for David on the same graph as question(1) and show the optimal bundle.
- 11)Which of the following describes what happens to a consumer's budget line if that consumer's budget increases? The budget line. A) becomes steeper. B) shifts farther away from the origin of the graph. C) does not change. D) becomes more horizontal. E) shifts closer to the origin of the graph(18 points) 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. Show all calculations. (Hint: put movie rentals on the X axis) (2 points) Draw your budget line showing the different combinations of Movies that you can rent and sodas that you can purchase. (2 points) Suppose that movie rentals turn out to be half off ($3.00). Draw your new budget line on the same graph. (4 points) Draw the income compensated budget line and show the calculation for the income compensated budget line (2 points) Draw an indifference curve tangent to your original budget line at your original purchase point. (2 points) Draw an indifference curve showing where you will purchase at the new prices (6 points) Breakdown the shift from the original point of consumption to the new point of consumption using the income and substitution effects. Please provide a…21. The budget constraint:(a) Represents the set of all baskets the consumer can afford(b) Represents the set of all baskets the consumer can afford while spending all availableincome(c) Represents the set of all baskets that give the consumer the same level of utility whileholding spending constant(d) Represents the set of all baskets in which the consumer purchases only one of the goods
- Charlie eats only pizzas and fruit salads which are discrete goods. Each pizza has 1000kcal, and each fruit salads has 250kcal. The price of one fruit salad is £3, and the price of a pizza is £8. Charlie spends his entire budget on consumption and eats everything that he buys. He consumes no less than 1600 kcal per week and no more than 2500 kcal per week. Which of the following is true? a. His income must be between £16 and £30. b. He always spends at least half of his income on pizzas. c. He eats at least one pizza per week. d. He eats at least 2 fruit salads per week.1. Suppose you earn $1500 per week and you consume only two types of goods per week- sandwiches and orange juice, which you purchase at a mini mart. Each sandwich cost $150 and an orange juice is $75 per cup. Answer: a) Suppose your income increase from $1500 per week to $3000 per week. Construct a new table showing alternative combinations of sandwiches and cups of orange juice. Construct the new budget line. Why would this budget line be preferred to the old one with an income of $1500?EXERCISE 5 Loise spends £20 on tea (T) and coffee (C). Her preferences for these goods can be described by the following utility function: ( , ). Suppose that one cup of tea costs £1.60 while one cup of Loise’s favourite coffee costs £4.00. Find Loise’s optimal consumption bundle. Provide both algebraic and graphical solution. Explain your reasoning. Discuss how Loise’s optimal consumption choice would change when her disposable budget changes. If the price of tea increases to £2.00 per cup, how should the price of coffee change so that Loise can be as well off as before this change in prices? Discuss the implications of the price change from c) on Loise’s optimal choice. In your discussion, include the analysis of the substitution and income effects as well as Loise’s demand for tea and/or coffee.
- 14) If the expenditures of Salih are equal to his income, it means that he is consuming at a point a) inside his budget constraint b) outside his budget constraint c) on his budget constraint d) which cannot be determined1. a consumer has income of rm3000. orange juice costs rm3 a glass, and chicken rice costs rm6 a plate. draw the consumers budget constraint. what is the slope of this budget constraint. 2. Draw a consumer's indifference curves for orange juice and chicken rice . Describe and explain four properties of these difference curves. 3. Consider your decision about how many hours to work. a) Draw your budget constraint assuming that you play no taxes on your income. on the same diagram, draw another budget constraint assuming that you pay 15 percent tax. b) Show how the tax might lead to more hours of work, fewer hours, or the same number of hours. explain.10) A consumption points inside the budget line A) is unaffordable. B) shows that the consumer spends income on only one of the goods. C) shows that the consumer has chosen to spend all of his or her income on both products. D) is possible to afford but has some unspent income.
