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. (g) The opportunity cost of one piece of clothing is ___ units of food. h) If Maria’s income rises to $3,000, the new intercepts of her budget line are _____ F and _____ C. (i) Graph this new budget line on your graph for item (d) above.

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. (g) The opportunity cost of one piece of clothing is _ units of food. h) If Maria’s income rises to $3,000, the new intercepts of her budget line are _ F and ___ C. (i) Graph this new budget line on your graph for item (d) above.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 10SQ

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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. 400 units of Food, 100 units of Clothing (g) The opportunity cost of one piece of clothing is ___ units of food. h) If Maria’s income rises to $3,000, the new intercepts of her budget line are _____ F and _____ C. (i) Graph this new budget line on your graph for item (d) above.
MICROECONOMICS Clara is leaving for the university restaurant with 3000 HUF in her pocket. Clara is only interested in two things; grilled chicken (x) and salad (y). One slice of grilled chicken costs 300 HUF and the price of 100 grams of salad is 500 HUF. What is the slope of Clara's budget line assuming that she spends her entire budget on these two items and she measures her consumption of grilled chicken on the horizontal axis and salad on the vertical one? (Please use two decimals in your answer.)
Suppose that Martha’s income is $40,000 per year. She can spend it on health care visits, which cost $80 per visit, or on groceries (standing for all other goods), which cost $100 per bag of groceries. Draw Martha’s budget constraint. Using indifference curves, show Martha’s optimum if she buys 300 bags of groceries per year.
Mary has two dinner options available: eating a home cooked meal for $150 per meal, or at a restaurant for $260 per meal. Her weekly budget is $2500.iii. What would be the marginal rate of substitution at the point thatcorresponds to the optimal consumption choice? Interpret the marginalrate of substitution. iv. Suppose the price of a home cooked meal increases to $200 and incomeincreases to $4200. Show the impact of the new budget line relative to theoriginal budget line. What would be the new marginal rate of substitutionthat corresponds to the optimal consumption choice? Interpret themarginal rate of substitution.
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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. (Hint: put movie rentals on the X axis) a) (2 points) Draw your budget line showing the different combinations of Movies that you can rent and sodas that you can purchase. b) Suppose that movie rentals turn out to be half off ($3.00). Draw your new budget line on the same graph. c) Draw the income compensated budget line d) Draw an indifference curve tangent to your original budget line at your original purchase point. e) Draw an indifference curve showing where you will purchase at the new prices F) Breakdown the shift from the original point of consumption to the new point of consumption using the income and substitution effects. Please provide a detailed explanation in addition to the graph. You will need to draw a third indifference curve. Please do e and f. If…
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• Sam enjoys leisure time and money, which comes from working. • Sam has 16 non-sleeping hours in a day to work with. • Sam earns $10 per hour while working. Sam gets 1 unit of utility out of each dollar earned. • Sam gets 20 units of utility from the first hour of leisure, 18 units from the second, 16 units from the third, etc. What kind of budget constraint should we draw to analyze Sam's decision of how much to work? How many hours should Sam work to get as much utility as possible? How many hours should Sam devote to leisure to get as much utility as possible?
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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.