a. Marsha has a salary of $500. He spends his entire budget on milk and cookies. The cost of a gallon of milk is $4 and the cost of a slice of cookies is $8. i. Construct Marsha's budget constraint (place) cookies on the y-axis. ii. Suppose Marsha's salary rises by 50%. Also suppose that the price of milk and cookies each rise by 50%. Construct Marsha's new budget constraint. What is the difference between the new and old budget constraints? iii. Suppose that the price of cookies fell from $8 per cookie to $4. Construct Marsha's new budget constraint. What is the difference between the new and old budget constraints. b. Explain the relationship between the budget constraint and indifference curve at consumer optimum.

a. Marsha has a salary of $500. He spends his entire budget on milk and cookies. The cost of a gallon of milk is $4 and the cost of a slice of cookies is $8. i. Construct Marsha's budget constraint (place) cookies on the y-axis. ii. Suppose Marsha's salary rises by 50%. Also suppose that the price of milk and cookies each rise by 50%. Construct Marsha's new budget constraint. What is the difference between the new and old budget constraints? iii. Suppose that the price of cookies fell from $8 per cookie to $4. Construct Marsha's new budget constraint. What is the difference between the new and old budget constraints. b. Explain the relationship between the budget constraint and indifference curve at consumer optimum.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter2: Choice In A World Of Scarcity

Section: Chapter Questions

Problem 19CTQ: Suppose Alphonsos town raises the price of bus tickets from 0.50 to 1 and file price of burgers...

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Why does a change in income cause a parallel shift in the budget constraint?
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.
Marsha has a salary of $500. He spends his entire budget on milk and cookies. The cost of a gallon of milk is $4 and the cost of a slice of cookies is $8. Construct Marsha’s budget constraint (place) cookies on the y-axis. Suppose Marsha’s salary rises by 50%. Also suppose that the price of milk and cookies each rise by 50%. Construct Marsha’s new budget constraint. What is the difference between the new and old budget constraints? Suppose that the price of cookies fell from $8 per cookie to $4. Construct Marsha’s new budget What is the difference between the new and old budget constraints. Explain the relationship between the budget constraint and indifference curve at consumer optimum.
Question 3 a. Marsha has a salary of $500. He spends his entire budget on milk and cookies. The cost of a gallon of milk is $4 and the cost of a slice of cookies is $8. i. Construct Marsha’s budget constraint (place) cookies on the y-axis. ii. Suppose Marsha’s salary rises by 50%. Also suppose that the price of milk and cookies each rise by 50%. Construct Marsha’s new budget constraint. What is the difference between the new and old budget constraints? iii. Suppose that the price of cookies fell from $8 per cookie to $4. Construct Marsha’s new budget constraint. What is the difference between the new and old budget constraints. b. Explain the relationship between the budget constraint and indifference curve at consumer optimum.
Andre has a salary of $1000. He spends his entire budget on shoes and beers. The cost for a pair of shoes is $15 and the cost for can of beer is $25. 1. Construct Andre’s budget constraint (place) beers on the y-axis 2. Suppose Andre’s salary rises by 25%. Also suppose that the price of shoes and beers each rise by 40%. Construct Andre’s new budget constraint. What is the difference between the new and old budget constraints?
Andre has a salary of $1000. He spends his entire budget on shoes and beers. The cost for a pair of shoes is $15 and the cost for can of beer is $25. a.Construct Andre’s budget constraint (place) beers on the y-axis. b.Suppose Andre’s salary rises by 25%. Also suppose that the price of shoes and beers each rise by 40%. Construct Andre’s new budget constraint. What is the difference between the new and old budget constraints? c.Suppose that the price of beers fell from $25 per beer to $15. Construct Andre’s new budget constraint. What is the difference between the new and old budget constraints.
Andre has a salary of $1000. He spends his entire budget on shoes and beers. The cost for a pair of shoes is $15 and the cost for can of beer is $25. a. Construct Andre’s budget constraint (place) beers on the y-axis. b. Suppose Andre’s salary rises by 25%. Also suppose that the price of shoes and beers each rise by 40%. Construct Andre’s new budget
Question 3a. Andre has a salary of $1000. He spends his entire budget on shoes and beers. The cost for a pair of shoes is $15 and the cost for can of beer is $25. i. Construct Andre’s budget constraint (place) beers on the y-axis. ii. Suppose Andre’s salary rises by 25%. Also suppose that the price of shoes and beers each rise by 40%. Construct Andre’s new budget constraint. What is the difference between the new and old budget constraints? iii. Suppose that the price of beers fell from $25 per beer to $15. Construct Andre’s new budget constraint. What is the difference between the new and old budget constraints.
Suppose that the price of commodity Y is $1 per unit while the price of commodity X is $2 per unit and suppose that an individual’s money income is $16 per time period and is all spent on X and Y. (a) Draw the budget constraint line for this consumer and explain the reason for the shape and the properties of the budget constraint line
question 3 a Andre has a salary of $1000. He spends his entire budget on shoes and beers. The cost for a pair of shoes is $15 and the cost for can of beer is $25. - Construct Andre’s budget constraint (place) beers on the y-axis. - Suppose Andre’s salary rises by 25%. Also suppose that the price of shoes and beers each rise by 40%. Construct Andre’s new budget constraint. What is the difference between the new and old budget constraints? - Suppose that the price of beers fell from $25 per beer to $15. Construct Andre’s new budget constraint. What is the difference between the new and old budget constraints.
Question 3 A. Andre has a salary of $1000. He spends his entire budget on shoes and beers. The cost for a pair of shoes is $15 and the cost for can of beer is $25. - Construct Andre’s budget constraint (place) beers on the y-axis. - Suppose Andre’s salary rises by 25%. Also suppose that the price of shoes and beers each rise by 40%. Construct Andre’s new budget constraint. What is the difference between the new and old budget constraints? - Suppose that the price of beers fell from $25 per beer to $15. Construct Andre’s new budget constraint. What is the difference between the new and old budget constraints. B. Explain the relationship between the budget constraint and indifference curve at consumer optimum.
a. Andre has a salary of $1000. He spends his entire budget on shoes and beers. The cost for a pair of shoes is $15 and the cost for can of beer is $25. i. Construct Andre’s budget constraint (place) beers on the y-axis.ii. Suppose Andre’s salary rises by 25%. Also suppose that the price of shoes and beers each rise by 40%. Construct Andre’s new budgetconstraint. What is the difference between the new and old budget constraints? iii. Suppose that the price of beers fell from $25 per beer to $15. Construct Andre’s new budget constraint. What is the difference between the new and old budget constraints. b. Explain the relationship between the budget constraint and indifference curve at consumer optimum.