Alex lives in Moscow, where tomatoes sell for $2 a kilo, oranges sell for $1 a kilo and mango sell for $3 a kilo. He earns $15 per day. Kate lives in Novosibirsk, where tomatoes sell for $3 a kilo, oranges sell for $6 a kilo and mango sell for $5. She earns $55 a day. Consider two alternative situations: (i) Alex consumes 4 kilos of tomatoes, 4 kilos of oranges and 1 kilo of mango; Kate consumes 6 kilos of tomatoes, 2 kilos of oranges and 5 kilos of mango. (ii) Alex consumes 4 kilos of tomatoes, 4 kilos of oranges and 1 kilo of mango, Kate consumes 1 kilo of tomatoes, 7 kilos of oranges and 2 kilos of mango. Can you determine whether in either of these situations Alex and Kate have different tastes? Explain.

Alex lives in Moscow, where tomatoes sell for $2 a kilo, oranges sell for $1 a kilo and mango sell for $3 a kilo. He earns $15 per day. Kate lives in Novosibirsk, where tomatoes sell for $3 a kilo, oranges sell for $6 a kilo and mango sell for $5. She earns $55 a day. Consider two alternative situations: (i) Alex consumes 4 kilos of tomatoes, 4 kilos of oranges and 1 kilo of mango; Kate consumes 6 kilos of tomatoes, 2 kilos of oranges and 5 kilos of mango. (ii) Alex consumes 4 kilos of tomatoes, 4 kilos of oranges and 1 kilo of mango, Kate consumes 1 kilo of tomatoes, 7 kilos of oranges and 2 kilos of mango. Can you determine whether in either of these situations Alex and Kate have different tastes? Explain.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Solve all the Questions:- Harold lives on Doritos and seafood salads. The price of Doritos is 1 dollar per bag and the price of seafood salads is 2 dollars each. Harold allows himself to spend no more than 11 dollars a day on food. He also restricts his consumption to 6,500 calories per day. There are 1,500 calories in a bag of Doritos and 500 calories in a seafood salad. If he spends his entire money budget each day and consumes no more calories than his calo-rie limit, he can consume up to a. 5 bag of Doritos per day but no more. b. 1 bag of Doritos per day but no more. c. 4 bag of seafood salad per day but no more. d. 3 bag of Doritos per day but no more. Quincy lives on pretzels and seafood salads. The price of pretzels is 1 dollar per bag and the price of seafood salads is 2 dollars each. Quincy allows himself to spend no more than 14 dollars a day on food. He also restricts his consumption to 3,400 calories per day. There are 600 calories in a bag…
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 constraint
3. Larry lives with his parents and enjoys listening to jazz. Because of his living arrangements, his only expense is on jazz music. To earn money to buy new albums, Larry must work. Larry has 16 hours per day he could spend listening to jazz or working. Each hour he works he earns $6. Each album costs him $12. Diagram Larry's budget constraint for new jazz albums and time spent listening to jazz. If Larry's parents require him to spend two hours per day doing chores around the house, what happens to his budget constraint? Does the requirement to do chores make Larry worse off?
Kate has $20. Fish sandwiches cost $5, and a cup of hot chocolate costs $4. What happens to Kate’s budget constraint If hot chocolate goes on sale for $2 a cup?
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
Suppose that Saudi Arabia produces 10,000,000 barrels of oil and 1,000 bushels of wheat each week. Suppose that India produces 12857 barrels12857 barrels of oil and 12857 bushels12857 bushels of wheat each week. In autarky, what is the largest amount of wheat Saudi Arabia can consume every week?
In May and June, Tammy spent all her clothing budget on bathing suits and beach bags. Each bathing suit costs $75. At Tammy's optimal choice, her marginal utility from the last bathing suit purchased is 300 and her marginal utility from the last beach bag purchased is 200. This means that each handbag must cost: a. $50 b. $25 c. $100 d. $150
jamie has $100 that he can spend on milk and gas. A gallon of milk costs $5.However, government gives its citizens a coupon that entitles people to 20%discount on their first 10 gallon milk purchases. Gas costs $4 per gallon andgovernment charges $1 for each gallon of purchased gas. Jamies utility functionis U (x, y) = 9x+10y, where x and y represent gallons of milk and gas consumed,respectively. What is Jamies optimal consumption of milk and gas?Part bIf government removes the quantity restriction to which the coupon applies (i.e.20% discount is applied to any quantity of milk purchased), what will be jamieoptimal consumption?
Question 1 Tom is trying to figure out how to supplement his student bursary of £200 per week. He is considering a part-time job at a restaurant. The wage is £8 per hour. His utility function is U(C, L) = C L where C is his consumption measured in £ per week and L his leisure, measured in hours per week. The amount of leisure time that he has left after allowing for necessary academic activities is 50 hours a week. 1. Write out Tom's budget constraint and calculate the maximum value (i.e. he works the maximum time available) and minimum value? 2. Using your results from part 1, draw Tom's budget set (horizontal axis: leisure and vertical axis: consumption). 3. Let Y= student bursary, T = total amount of leisure time and w=wage. Set up the maximisation problem and calculate optimal consumption demand and leisure as a function of his student bursary and wage. 4. For the values given in the question, work out the value for optimal leisure hours and consumption spending L* and C*. 5.…
The president of LeTall University, President John, spends $30 per week on pizzas (qz)and beers (qb). At LeTall Pizza, his go-to pizza joint, pizza costs $3 per slice and beeralso costs $3 per can. Assume fractions of the goods are allowed.(a) Draw President John’s budget line (qb on the horizontal and qz on the vertical axis).(b) President John receives a coupon from LeTall Pizza. The coupon, which will expirein a week, allows him to buy a can of beer at a discounted price of $1 per can. Itis, however, only good for a dozen cans of beer. Draw President John’s budget lineunder the coupon. Label any critical points on the budget line.(c) In another week, LeTall Pizza offers a special deal for pizza. For every half dozenslices of pizza bought during the week, one can get two additional slices for free.Draw President John’s budget line under the special deal. Label any critical pointson the budget line.
Pedro, a retired economics professor, grows lemons and oranges in his back- yard. He consumes some of these fruits, and sells some in a local farmer's market. Pedro's preferences are represented by the following utility function U(x, y) = min{x,y}. In one season he can harvest 20 pounds of lemons and 60 pounds of oranges. In the local market, price of lemons is $4 per pounds and price of oranges is $2 per pound. Pedro receives $300 income from his retirement plan per season. Question 1 Part a Find Pedro's optimal consumption bundle. Make sure to draw his budget con- straint and indifference curves to show his optimal choice. Question 1 Part b Suppose that the price of lemons rises to $5 per pound. What is Pedro's optimal consumption bundle now? Decompose the total change in demand due to a price change into a substitution effect, ordinary income effect and endowment income effect and graphically demonstrate it.
As Gasoline Prices Soar, Americans Slowly Adapt As gas prices rose in March 2008, Americans drove 11 billion fewer miles than in March 2007. Realizing that prices are not going down, Americans are adapting to higher energy costs. Americans spend 3.7 percent of their disposable income on transportation fuels. How much we spend on gasoline depends on the choices we make: what car we drive, where we live, how much time we spend driving, and where we choose to go. For many people, higher energy costs mean fewer restaurant meals, deferred weekend outings with the kids, less air travel, and more time closer to home. Questions 1) List and explain the elasticities of demand that are implicitly referred to in the news clip. 2) Why, according to the news clip, is the demand for gasoline inelastic?