6.5 (0) Shirley Sixpack, as you will recall, thinks that two 8-ounce c of beer are exactly as good as one 16-ounce can of beer. Suppose t these are the only sizes of beer available to her and that she has $30 spend on beer. Suppose that an 8-ounce beer costs $.75 and a 16-ou beer costs $1. On the graph below, draw Shirley's budget line in blue i and draw some of her indifference curves in red. 8-ounce cans 40 30 20 10 20 16-ounce cans 10 30 40 (a) At these prices, which size can will she buy, or will she buy some of each?, (6) Suppose that the price of 16-ounce beers remains $1 and the price of S-ounce beers falls to 8.55. Will she buy more 8-ounce beers?. (c) What if the price of 8-ounce beers falls to 8.40? How many 8-ounce beers will she buy then?- (d) If the price of 16-ounce beers is $1 each and if Shirley chooses some S-ounce beers and some 16-ounce beers, what must be the price of 8-ounce beers? (e) Now let us try to describe Shirley's demand function for 16-ounce beers as a function of general prices and income. Let the prices of 8-ounce and 16-ounce beers be ps and Pie, and let her income be m. If Pie < 2Ps, then the mumber of 16-ounce beers she will demand is- Il Ps > 2Ps then the mumber of 16-ounce beers she will demand is . If Pe= -Ps, she will be indifferent between any affordable combinations.
6.5 (0) Shirley Sixpack, as you will recall, thinks that two 8-ounce c of beer are exactly as good as one 16-ounce can of beer. Suppose t these are the only sizes of beer available to her and that she has $30 spend on beer. Suppose that an 8-ounce beer costs $.75 and a 16-ou beer costs $1. On the graph below, draw Shirley's budget line in blue i and draw some of her indifference curves in red. 8-ounce cans 40 30 20 10 20 16-ounce cans 10 30 40 (a) At these prices, which size can will she buy, or will she buy some of each?, (6) Suppose that the price of 16-ounce beers remains $1 and the price of S-ounce beers falls to 8.55. Will she buy more 8-ounce beers?. (c) What if the price of 8-ounce beers falls to 8.40? How many 8-ounce beers will she buy then?- (d) If the price of 16-ounce beers is $1 each and if Shirley chooses some S-ounce beers and some 16-ounce beers, what must be the price of 8-ounce beers? (e) Now let us try to describe Shirley's demand function for 16-ounce beers as a function of general prices and income. Let the prices of 8-ounce and 16-ounce beers be ps and Pie, and let her income be m. If Pie < 2Ps, then the mumber of 16-ounce beers she will demand is- Il Ps > 2Ps then the mumber of 16-ounce beers she will demand is . If Pe= -Ps, she will be indifferent between any affordable combinations.
Chapter3: Preferences And Utility
Section: Chapter Questions
Problem 3.15P
Related questions
Question
100%
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Microeconomics
Economics
ISBN:
9781305156050
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Microeconomics
Economics
ISBN:
9781305156050
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
Principles of Economics, 7th Edition (MindTap Cou…
Economics
ISBN:
9781285165875
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning