Anna is a Vancouverite who starts off her day drinking either a coffee or a bubble tea. From her part-time job, she has earned P15 that she can spend on either coffee or bubble tea over a month. A coffee costs P1, and a bubble tea costs P1. Draw her budget line, with bubble tea on the y-axis. If she chooses to drink only coffee or only bubble tea for one month, how many of each can she drink?
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Anna is a Vancouverite who starts off her day drinking either a coffee or a bubble tea. From her part-time job, she has earned P15 that she can spend on either coffee or bubble tea over a month. A coffee costs P1, and a bubble tea costs P1.
- Draw her budget line, with bubble tea on the y-axis. If she chooses to drink only coffee or only bubble tea for one month, how many of each can she drink?
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- Maria spends all of her income of $2,000 on food (F) and clothing (C). The prices per unit are: PF = $5 and PC = $20. Graph Maria’s budget line, with F on the vertical axis and C on the horizontal axis.Setting pX = qX and pY = qY, we have: 2x + 4y = 4x + 2y WHY? This is just the equalization of the two budget lines. What does the prices have to do with it? 2x + 4x = 10 x = 2 It doesn't look correct: 6x = 10 is not x = 2 So the price ratio at which Anne is indifferent is 2 bagels per dollar and 0.5 liters of orange juice per dollar, which corresponds to a slope of -2 in the budget line. To find the corresponding value of a, we need to solve for a in the equation: -2 = -pX/pY = -2/4 = -1/2 = (1-a)/a Solving for a, we get: 1/2a = 3/2 a = 2/3 Not clear how the logic and the calculationSuppose that the price of commodity Y is $ 20 per unit while the price of commodity X is $ 15 per unit and suppose that an individual’s money income is $ 100 per period and is all spent on X & Y. Draw the budget constraint line for this consumer at the initial point. 2. If the price of X decreases to $10, incorporate BL2 showing change in the Budget line.
- Sienna gets a total of 20 utils per week from her consumption of pizza and a total of 40 utils per week from her consumption of yogurt. The price of pizza is $1 per slice, the price of yogurt is $1 per cup, and she consumes 10 slices of pizza and 20 cups of yogurt each week. Which of the following statements is correct regarding Sienna's current consumption of pizza and yogurt? Sienna should eat more yogurt and less pizza, as she is getting more utils from the $20 spent on yogurt than from the $10 spent on pizza. Sienna should eat more pizza and less yogurt, as she is getting more utils from her last dollar spent on pizza than her last dollar spent on yogurt. We cannot determine if Sienna is maximizing her total utility with the information provided. Sienna should eat more yogurt and less pizza, as she is getting more utils from her last dollar spent on yogurt than her last dollar spent on pizza.Ebrima gets $3 per month as an allowance to spend any way he pleases. Because he likes only peanut butter and jelly sandwiches, he spends the entire amount on peanut butter (at $.05 per ounce) and jelly (at $.10 per ounce). Bread is provided free of charge by a concerned neighbor. Ebrima is a picky eater and makes his sandwiches with exactly 1 ounce of jelly and 2 ounces of peanut butter. He is set in his ways and will never change these proportions. How much peanut butter and jelly will Ebrima buy with his $3 allowance in a week? Suppose the price of jelly were to rise to $.15 per ounce. How much of each commodity would be bought? By how much should Ebrima’s allowance be increased to compensate for the rise in the price of jelly in part b? Graph your results of part a through part c. In what sense does this problem involve only a single commodity—peanut butter and jelly sandwiches? Graph the demand curve for this single commodity. Discuss the results of this problem in terms of…Question Ebrima gets $3 per month as an allowance to spend any way he pleases. Because he likes only peanut butter and jelly sandwiches, he spends the entire amount on peanut butter (at $.05 per ounce) and jelly (at $.10 per ounce). Bread is provided free of charge by a concerned neighbor. Ebrima is a picky eater and makes his sandwiches with exactly 1 ounce of jelly and 2 ounces of peanut butter. He is set in his ways and will never change these proportions. How much peanut butter and jelly will Ebrima buy with his $3 allowance in a week? Suppose the price of jelly were to rise to $.15 per ounce. How much of each commodity would be bought? By how much should Ebrima’s allowance be increased to compensate for the rise in the price of jelly in part b? Graph your results of part a through part c. In what sense does this problem involve only a single commodity—peanut butter and jelly sandwiches? Graph the demand curve for this single commodity. Discuss the results of this problem…
- Matt has $13 in income that he devotes entirely towards caffeine purchases, specifically coffee and tea. Tea costs $2/cup and coffee costs $3/cup. Also, tea is subject to a quantity tax of $4/cup, and coffee is subject to a value tax of 0%. By how much will the slope of Matt's budget constraint change if his income were to increase from $13 to $40?(18 points) Suppose you have $30 and you are going to rent some movies and buy some sodas. Suppose movie rentals are $6.00 each and sodas are $1.00 each. Your original consumption bundle is 3 movies and 12 sodas. Show all calculations. (Hint: put movie rentals on the X axis) (2 points) Draw your budget line showing the different combinations of Movies that you can rent and sodas that you can purchase. (2 points) Suppose that movie rentals turn out to be half off ($3.00). Draw your new budget line on the same graph. (4 points) Draw the income compensated budget line and show the calculation for the income compensated budget line (2 points) Draw an indifference curve tangent to your original budget line at your original purchase point. (2 points) Draw an indifference curve showing where you will purchase at the new prices (6 points) Breakdown the shift from the original point of consumption to the new point of consumption using the income and substitution effects. Please provide a…Consider a consumer who wants to consume only two commodities and has an income of $250. Assume the price of good 1 is $25 per unit and the price of good 2 is $50 per unit. Now, inflation causes the price of good 1 to increase to $30 per unit, while the price of good 2 increases to $60 per unit. On the other hand, the consumer also gets a raise of $110 (so her new income is $360). What will happen to the consumption bundles (x₁, x₂)? How much units will increase for both x₁ and x₂?
- If the price of a slice of cake is $4, the price of a slice of pie is $2, and Latasha spends her entire budget of $10, she will choose to buy of pie and of cake.Mrs. Griffiths earns $5000 a week and spends her entire income on dresses and handbags, since these are the only two items that provide her utility. Furthermore, Mrs. Griffiths insists that for every dress she buys, she must also buy a handbag. Suppose the price of a dresses increases to $200 and income decreases to $4200. What is the new algebraic equation for Mrs. Griffiths budget constraint? Show the impact of the new budget line relative to the original budget line. What would be the new marginal rate of substitution that corresponds to the optimal consumption choice? Interpret the marginal rate of substitution. Assume for this question only that when the price of dresses decreases, less of that good is demanded. Illustrate the income and substitution effect of this price decrease.Q19 Suppose a consumer can purchase only two goods: pasta and rice. Let the quantity of pasta be measured on the vertical axis and the quantity of rice be measured on the horizontal axis. If the price of pasta falls, with no change in the price of rice or in the consumer's money income, then the budget line for the consumer will rotate... a. Outward parallel to the existing budget line. b. Toward the origin and become flatter. c. Away from the origin and become steeper. d. Away from the origin and become flatter. e. Toward the origin and become steeper.