Max chooses to purchase movie tickets and restaurant meals every week with his $100. The budget constraint for Max shows _____________ that is __________ and his _________ between movie and restaurant meal. Group of answer choices; a)expenditure; he prefers; trade-off b)consumption bundles; not affordable; trade-off c)consumption bundles; affordable; trade-off d)consumption bundles; afford
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- Jane is your typical economics student who consumes two goods: economics textbook and coffee. Jane’s income is $40. She can spend it all on books and get 5 or she can spend it all on coffee and get 20 cups.Given this information, construct the equation for Jane’s budget line and plot it (put books on the x–axis and coffee on the y–axis)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)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.Jane is your typical economics student who consumes two goods: economics textbook and coffee. Jane’s income is $40. She can spend it all on books and get 5 or she can spend it all on coffee and get 20 cups.Given this information, construct the equation for Jane’s budget line and plot it (put books on the x–axis and coffee on the y–axis) The following are bundles that Jane can afford with her income (as shown in Table 3.1):Table 3.1BooksCoffee 1- -0 -8 2- Fill in the blanks in the table with quantities that can exhaust Jane’s income. Assume that prices are the same as used in part (a). If marginal utility of a book is 20, what is the marginal utility of coffee if she is maximizing utility?
- Bottles of water sell for 1 euro and slices of chocolate cake sells for 3 euros. Suppose Jack, whose preferences satisfy all of the basic assumptions of consumer choice theory, buys 5 bottles of water and one slice of chocolate cake every day. At this consumption bundle, his MRS of bottles of water for slices of chocolate cake is 3 (i.e. he is willing to give up 3 bottles of water to get an additional slice of cake). Which of the following is true? (Hint: draw this situation with bottles of water on the vertical axis and slices of cake on the horizonal axis). A. Jack could increase his utility by buying fewer bottles of water and more slices of cake. B. Jack could increase his utility by buying more bottles of water and less chocolate cake. C. Jack could not increase his utility because it is already at a maximum level. D. Jack could increase his utility by buying more bottles of water and more chocolate cake.Anne likes to have bagels and orange juice for breakfast. A consumption bundle consists of a quantity of bagels, x (number of bagels), and a quantity of orange juice, y (liters of orange juice). For all of the following questions you can assume that the consumption set is R2+. This means that bagels and orange juice can be consumed in any non-negative quantity. Anne has a wealth of $10 to spend. At supermarket-ABC the price of bagels is Px = 2$/bagel and the price of orange juice is Py = 4$/liter. At supermarket-XYZ the price of bagels is qX = 4$/bagel and the price of orange juice is qY = 2$/liter. Supermarket-ABC is on the East Side; supermarket-XYZ is on the West Side; Anne lives in the middle. Suppose that Anne can travel for free to either one of the two supermarkets, but she can only go to one of them to do her shopping. Anne knows what the prices of bagels and orange juice are at both supermarkets before she decides where to shop. This means that the budget set is now the set of…Anne likes to have bagels and orange juice for breakfast. A consumption bundle consists of a quantity of bagels, x (number of bagels), and a quantity of orange juice, y (liters of orange juice). For all of the following questions you can assume that the consumption set is R2+. This means that bagels and orange juice can be consumed in any non-negative quantity. Anne has a wealth of $10 to spend. At supermarket-ABC the price of bagels is Px = 2$/bagel and the price of orange juice is Py = 4$/liter. At supermarket-XYZ the price of bagels is qX = 4$/bagel and the price of orange juice is qY = 2$/liter. Supermarket-ABC is on the EastSide; supermarket-XYZ is on the West Side; Anne lives in the mid-dle. Suppose that Anne can travel for free to either one of the twosupermarkets, but she can only go to one of them to do her shopping.Anne knows what the prices of bagels and orange juice are at both supermarkets before she decides where to shop. This means that thebudget set is now the set of…
- Carol needs to decide how to spend her wealth on fish and chicken. For Carol, 1 lb of fish is equivalent to 2 lb of chicken. Her preferences can be represented by the utility function u(x; y) = 2x + y where x is the quantity of fish (in lbs) and y is the quantity of chicken (in lbs). The consumption set is R2+. a) Suppose now that the price of fish increases to $2 per pound. Draw Carol's budget set, labeling the slope and the intercept points clearly. How much fish and chicken will Carol choose to purchase? b) Suppose that Carol goes to a different supermarket where the price of fish is Px > 0 (in dollars per pound of fish) and the price of chicken is Py > 0 (in dollars per pound of chicken). Find Carol's demand for fish as a function of the prices Px and Py . You can assume that she still has $20 to spend. Assume that the price of chicken is Py = 1. Draw Carol's demand function for fish as a function of the price of fish (Px) in a diagram with the quantity of fish on the…Bottles of water sell for 1 euro and slices of chocolate cake sells for 5 euros. Suppose Jack, whose preferences satisfy all of the basic assumptions of consumer choice theory, buys 5 bottles of water and one slice of chocolate cake every day. At this consumption bundle, his MRS of bottles of water for slices of chocolate cake is 3 (i.e. he is willing to give up 3 bottles of water to get an additional slice of cake). Which of the following is true? (Hint: draw this situation with bottles of water on the vertical axis and slices of cake on the horizontal axis). Jack could not increase his utility because it is already at a maximum level. Jack could increase his utility by buying more bottles of water and less chocolate cake. Jack could increase his utility by buying more bottles of water and more chocolate cake. Jack could increase his utility by buying fewer bottles of water and more slices of cake.Anne likes to have bagels and orange juice for breakfast. A consumption bundle consists of a quan- tity of bagels, x (number of bagels), and a quantity of orange juice, y (liters of orange juice). For all of the following questions you can assume that the consumption set is R2 . This means that bagels and orange juice can be consumed in any non-negative quantity. Anne has a wealth of $10 to spend. At supermarket-ABC the price of bagels is pX = 2$/bagel and the price of orange juice is pY = 4$/liter. At supermarket-XYZ the price of bagels is qX = 4$/bagel and the price of orange juice is qY = 2$/liter. Supermarket-ABC is on the East Side; supermarket-XYZ is on the West Side; Anne lives in the mid- dle. Suppose that Anne can travel for free to either one of the two supermarkets, but she can only go to one of them to do her shopping. Anne knows what the prices of bagels and orange juice are at both supermarkets before she decides where to shop. This means that the budget set is now…
- Assuming the two good case. When a person is attempting to maximize utility and the price of one of the two goods increases, then: a. The budget constraint will expand (rotate away from the origin), shifting the budget line outward indicating fewer choices are now affordable and a lower utility level is now possible. b. The budget constraint will contract (rotate towards the origin), shifting the budget line inward indicating more choices are now affordable and a lower utility level is now possible. c. The budget constraint will contract (rotate towards the origin), shifting the budget line outward indicating fewer more are now affordable and a higher utility level is now possible. d. The budget constraint will contract (rotate towards the origin), shifting the budget line inward indicating fewer choices are now affordable and a lower utility level is now possible.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…Assuming the two good case. When a person is attempting to maximize utility and income increases, then: a. The budget constraint expands, shifting the budget line outward indicating more choices are now affordable and a higher utility level is now possible. b. The budget constraint contracts, shifting the budget line outward indicating more choices are now affordable and a higher utility level is now possible. c. The budget constraint expands, shifting the budget line inward indicating more choices are now affordable and a lower utility level is now possible. d. The budget constraint contracts, shifting the budget line outward indicating more choices are now affordable and a lower utility level is now possible.
