7. When Haitham and Mohammed were students at Sultan Qaboos University they each 20 ate ten Yalafels per week. Their income at that time was OMR 0 each per week. After graduating, both of them found jobs and their incomes have increased ten times. 200 Haitham still enjoys falafels very, mych and buys even more, but Mohammed plans to buy fewer falafels in favour of foods he prefersOmore. When looking at income O elasticity of demand for falafels: a. Haitham's would be negative and Mohammed's would be positive Haitham's would be positive and Mohammed's would be negative c. Haitham's would be zero and Mohammed's would approach infinity d. Haitham's would approach infinity and Mohammed's would be zero

7. When Haitham and Mohammed were students at Sultan Qaboos University they each 20 ate ten Yalafels per week. Their income at that time was OMR 0 each per week. After graduating, both of them found jobs and their incomes have increased ten times. 200 Haitham still enjoys falafels very, mych and buys even more, but Mohammed plans to buy fewer falafels in favour of foods he prefersOmore. When looking at income O elasticity of demand for falafels: a. Haitham's would be negative and Mohammed's would be positive Haitham's would be positive and Mohammed's would be negative c. Haitham's would be zero and Mohammed's would approach infinity d. Haitham's would approach infinity and Mohammed's would be zero

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter6: Consumer Choices

Section: Chapter Questions

Problem 1SCQ: Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can...

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Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either call her on the land-line phone for five cents per minute or he can drive to see her, at a roundâ€”trip cost of 2 in gasoline money. He has a total of 10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses a handy utilimometer that measures his total utility from personal visits and from phone minutes. Using the values in Table 6.6, figure out the points 011 Jeremys consumption choice budget constraint (it may be helpful to do a sketch) and identify his utility-maximizing point.
Draw Maries budget constraint with pies on the horizontal axis and magazines on the vertical axis. What is the slope of me budget constraint?
Think back to a purchase that you made recently. How would you describe your thinking before you made that purchase?
If the price of a magazine is 4 each, what is the maximum number of magazines she could buy in a week?
Would you expect total utility to rise or fall with additional consumption of a good? Why?
Anastasia, Emma, and Greta are deciding what to do on a weekend getaway. They each suggest a first, second, and third choice and then vote on the options. Table 18.2 shows their first, second, and third choice preferences. Explain why they will have a hard time teaching a decision. Does the group prefer mountain biking to canoeing? What about canoeing compared to the beach? What about the beach compared to the original choice of mountain biking?
Who determines how much utility an individual will receive from consuming a good?
Praxilla, who lived in ancient Greece, derives utility from reading poems and from eating cucumbers. Praxilla gets 30 units of marginal utility from her first poem 27 units of marginal utility from her second poem 24 units of marginal utility from her third poem, and so on, with marginal utility declining by three units for each additional poem. Praxilla gets six units of marginal utility for each of her next three cucumbers consumed, five units of marginal utility for each of her next three cucumbers consumed, four units of marginal utility for each of the following three cucumbers consumed, and so on, with marginal utility declining by one for every three cucumber consumed. A poem costs three bronze coins hut a cucumber costs only one bronze coin. Praxilla has 18 bronze coins. Sketch Praxillas budget set between poems and cucumbers, placing poems on the vertical axis and cucumbers on the horizontal axis. Start off with the choice of zero poems and 18 cucumbers, and calculate the changes in marginal utility of moving along the budget line to the next choice of one poem and 15 cucumbers. Using this step-by-step process based on marginal utility, create a table and identify Praxillas utilityâ€”maximizing choice. Compare the marginal utility of the two goods and the relative prices at the optimal choice to see if the expected relationship holds. Hint: Label the table columns: 1) Choice, 2} Marginal Gain from More Poems, 3) Marginal Loss from Fewer Cucumbers, 4) Overall Gain or Loss, 5) Is the previous choice Optimal? Label the table rows: 1) 0 Poems and 18 Cucumbers, 2) 1 Poem and 15 cucumbers, 3) 2 Poems and 12 cucumbers, 4) 3 Poems and 9 Cucumbers, 5) 4 Poems and 6 cucumbers 6) 5 Poems and 3 Cucumbers, 7) 6 Poems and 0 Cucumbers.
Suppose Alphonsos town raises the price of bus tickets from 0.50 to 1 and file price of burgers rises from 2 to 4. Why is file opportunity cost of bus tickets unchanged? Suppose Alphonsns weekly spending money increases from 10 to 20. How is his budget constraint affected from all three changes? Explain.
Suppose Alphonsos town raised the price of bus tickets to 1 per trip (while file price of burgers stayed at 2 and his budget remained 10 per week.) Draw Alphonsos new budget constraint. What happens to file opportunity cost of bus tickets?
4. URGENT Given that maximize utility of two goods, x and y, is where MUx/Px=MUy/Py MUx/MUy=Px/Py , where MU is marginal utility, and P is price. a. Explain what happens to the marginal utility of x, when more of x is consumed. b. Explain what a rational person should do when MUx/Px>MUy/Py , and how each MU, and MU/P changes or not. c. Graph and explain the intercepts and the slope of the budget line (constraint) when the budget is 100 and the price of x is 5 and the price of y is 4. d. Graph and explain an indifference curve that is tangent to a budget line. This is a general graph with no numbers.
. It is a hot day, and Bert is thirsty. Here is the value heplaces on each bottle of water:Value of first bottle $7Value of second bottle $5Value of third bottle $3Value of fourth bottle $1a. From this information, derive Bert’s demandschedule. Graph his demand curve for bottledwater.b. If the price of a bottle of water is $4, how manybottles does Bert buy? How much consumersurplus does Bert get from his purchases? ShowBert’s consumer surplus in your graph.c. If the price falls to $2, how does quantitydemanded change? How does Bert’s consumersurplus change? Show these changes in yourgraph.