A consumer has income of 15000. Masks costs $35 per mask, and sanitizers cost $70 per bottle. How a consumer should allocate expenditure in order to achieve maximum satisfacion and analyse how a rise in income might affect that allocation
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A consumer has income of 15000. Masks costs $35 per mask, and sanitizers cost $70 per bottle.
How a consumer should allocate expenditure in order to achieve maximum satisfacion and analyse how a rise in income might affect that allocation
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- A consumer has income of $15000. Masks costs $35 per mask, and sanitizers costs $70 per bottle. 1.Explain how a consumer should allocate expenditure in order to achieve maximum satisfaction and analyse how a rise in income might affect allocation.A consumer has income of $15,000. Masks costs $35 per mask, and sanitizers costs $70 per bottle. Under what circumstance(s) if any can an increase in the price of sanitizers induce a consumer to buy more of that good? Explain. Explain how a consumer should allocate expenditure in order to achieve maximum satisfaction and analyse how a rise in income might affect that allocation.Homer consumes only donuts and beer. When he consumes less than 10 beers, Homer would gladly drink one more. After drinking 10 beers, Homer is so drunk that he does not notice any additional bottle he drinks (that is, the benefit of an additional bottle of beer is zero). Drinking more than 17 beers is beyond the processing capability of Homer's liver and any additional bottle makes him sick (beer is no longer a "good" for Homer). Homer's preferences for donuts are similar. As long as he eats less than 15 donuts, an additional donut increases his utility. If he eats between 15 and 20 donuts, then additional donuts do not bring him any additional utility, and if he eats more than 20 donuts, then additional donuts make him worse off. 1. Sketch Homer's indifference curve passing through point (8 donuts, 8 beers). 2. Sketch Homer's indifference curve passing through point (16 donuts, 16 beers)
- Assume that Sara has $800 per month to divide between playing golf and playing paint ball . Assume Golf costs $40 and paintball costs $80 . Suppose Sara plays golf eight times per month and plays paintball six times per month . a. Draw Sara’s budget constraintb. Assume Sara has new expenses and can spend $320 only this month. Draw the new budget constraintc. As a result of a decrease in income Sara decides to play 11 rounds of golf and two games of paintball . what kind of a good is paintball ? what kind of a good is golf?d. Assume Sara has $400, the price of paintball is still $40 , but the price of Golf doubles , draw the new budget constraintImagine a market that sells two goods: food, and energy, selling at prices PF and PC, respectively. In a graph, plot an indifference curve and explain how you derive the optimal level of consumption of food and energy using the budget constraint. In 2022/2023, the UK government introduced the Energy Bill Support Scheme, which gave every household a discount on their energy bills for winter in the form of an income subsidy. Replicating the graph above, indicate how the indifference curve changes in the presence of the subsidy. How much of the change in the demand of each good is due to an income effect and how much to a substitution effect? Now suppose the subsidy is removed, and we return to the initial indifference curve (point a.). Imagine then that energy prices decrease by 10%, while food prices remain constant. How does the equilibrium presented graphically in part (a.) changes? As before, indicate how much of the change in quantity of each good consumed is due to the…Question Earlier this year, 2021, the price of chicken meat rose unexpectedly reached to 250/ kilo at peak from the previous price of 170/ kilo. This 68% increase of price per kilo was primarily caused by excess demand for chicken meat. This is the result of the decrease in consumption for pork meat due to the threat of African Swine Flu (ASF). However, even though consumer shifted preferences, the increase in the price of chicken was perceived to be too high for the budget of consumers. Therefore, sellers realized decrease in their daily aggregate sales from 1,000 kilos to 700 kilos. 1. Illustrate the change in the market equilibrium through a graph. 2. What presumably happened to the total revenues of the sellers during the price hike period? a.) Compute the price elasticity of demand b.) Derive the total revenue before the hike (TR1), and after the hike (TR2).
- A consumer has income of $15,000. Pillows costs $35 per pillow, and soda costs $70 per bottle. Under what circumstance(s) if any can an increase in the price of pillows induce a consumer to buy more of that good? Explain. Explain how a consumer should allocate expenditure in order to achieve maximum satisfaction and analyse how a rise in income might affect that allocation.What can you use to establish whether a budget has been allocated to maximise total utility? Market equilibrium Budget line Consumer equilibrium Marginal utility Total utilityI have to create a budget constraint for two cars with the median income. However, the income is smaller than the price of the cars. How can I approach this question?
- Brian spends his entire monthly income of $1200 on shoes (S) and pizzas (P). The price of a pair of shoes is $60, and the price of a pizza is $20. If he consumes 10 pairs of shoes and 30 pizzas, his MRS is 2P/1S. (A quantity of shoes is measured along the x-axis, and a quantity of pizza is measured along the y-axis.) His choice is optimal. True FalseMelanie has an income of $140 which she can spend on tea at $8 per cup or used clothes at $20 per clothing. What is Melanie’s budget line if her income and all prices increase by 20%?Assume that Sara has $800 per month to divide between playing golf and playing paint ball . Assume Golf costs $40 and paintball costs $80 . Suppose Sara plays golf eight times per month and plays paintball six times per month . Draw Sara’s budget constraint Assume Sara has new expenses and can spend $320 only this month. Draw the new budget constraint As a result of a decrease in income Sara decides to play 11 rounds of golf and two games of paintball . what kind of a good is paintball ? what kind of a good is golf? Assume Sara has $400, the price of paintball is still $40 , but the price of Golf doubles , draw the new budget constraint