The table shows the prices that Terry paid for some of his expenditures in June and July 2019. Explain and discuss why these prices might have led to commodity substitution or outlet substitution. in July On the basis of these price observations, commodity substitution and outlet substitution might have occurred when consumers bought more because they had become relatively. expensive. OA. steak and bread; less B. bananas and lettuce; less C. steak and lettuce; less OD. steak, bread, and lettuce; more Item Steak Bread Bacon Milk Tomatoes Apples Bananas Chicken Lettuce Price in June (dollars per unit) 4.11 3.25 3.62 2.62 1.60 1.18 0.62 Price in July 1.28 1.64 4.01 3.12 3.64 2.62 1.62 1.19 0.66 1.26 1.68

The table shows the prices that Terry paid for some of his expenditures in June and July 2019. Explain and discuss why these prices might have led to commodity substitution or outlet substitution. in July On the basis of these price observations, commodity substitution and outlet substitution might have occurred when consumers bought more because they had become relatively. expensive. OA. steak and bread; less B. bananas and lettuce; less C. steak and lettuce; less OD. steak, bread, and lettuce; more Item Steak Bread Bacon Milk Tomatoes Apples Bananas Chicken Lettuce Price in June (dollars per unit) 4.11 3.25 3.62 2.62 1.60 1.18 0.62 Price in July 1.28 1.64 4.01 3.12 3.64 2.62 1.62 1.19 0.66 1.26 1.68

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter6: Demand Relationships Among Goods

Section: Chapter Questions

Problem 6.3P

See similar textbooks

Similar questions

In the labor market, what causes a movement along the supply curve? What causes a shift in the supply curve?
(a) Draw a figure showing the separation of the substitution effect from the income effect (as defined by Hick) for a price increase. (b) Draw another figure showing the derivation of two demand curves for a price increase, one that keeps money income constant and the other that keeps real income constant as defined by Hicks
a) Explain by using an example why an MRS (Marginal Rate of Substitution) between two goods must equal the ratio of the price of the goods for the consumer to achieve maximum satisfaction?
The Marginal Rate of substitution depends on the O a. Tastes and preferences of the consumer B Price level of goods income of the consume Oc.income of the consumer O d. Availability of goods
A consumer has $300 to spend on goods X and Y. The market prices of these two goods are Px = $15 and Py = $5. a. What is the market rate of substitution between goods X and Y? b. Illustrate the consumer’s opportunity set in a carefully labeled diagram. c. Show how the consumer’s opportunity set changes if income increases by $300. How does the $300 increase in income alter the market rate of substitution between goods X and Y
b. Mary has two dinner options available: eating a home cooked meal for $150 permeal, or at a restaurant for $260 per meal. Her weekly budget is $2500.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
Pls help with below homework. Explain, in terms of income and substitution effects, why increased wages could lead to less work, OR why increased rates of return on savings could lead to reduced savings ?
For this question, assume that indifference curves are strictly convex, consumption andleisure are normal goods, and the optimal amounts of consumption, leisure, and labor arealways positive. A wage increase ______. (SE = substitution effect; IE = income effect)(a) increases labor supply via the SE and decreases labor supply via the IE(b) decreases labor supply via the SE and decreases labor supply via the IE(c) increases labor supply via the SE and increases labor supply via the IE(d) decreases labor supply via the SE and increases labor supply via the IE(e) Can’t tell without knowing the utility function
Question3 a) Suppose a household is faced with the choice between consuming gasoline (G) and all other goods (OG). Today the household consumes 800 liter of gasoline a year.Suppose then that a gasoline price increase is perfectly compensated by a wage increase. If the family followed the utility maximization model, how would this affect their consumption of gasoline? Explain by using a figure. b) Explain by using an example why an MRS (Marginal Rate of Substitution) between two goods must equal the ratio of the price of the goods for the consumer to achieve maximum satisfaction?
a. What is an Inferior good? Sketch an Engel curve for inferior goods and clearly label the two axes. b. Briefly explain why demand may increase as price increases? (Hint: think about substitution and income effects.) c. What is the relationship between Inferior and Giffen goods? Use a Slutsky equation to justify your statement. d. Some people may work less when their wage rates go up. Why is it the case? (Hint: think about substitution effect and endowment income effect).
A person is more likely to increase labor supply in response to an increase in the real wage, the ________ is the income effect and the ________ is the substitution effect.
Pls help me with this homework : Given the following leisure-income bundles, use the chord method to calculate the marginal rate of substitution (MRS) and make sure to use a graph in answering this question, given that the marginal utility of income (MUY) and marginal utility of leisure (MUL) are 4 and 40 respectively : Bundle A: 4 hours of leisure, income equals N$200, utility equals 200 utils; Bundle B: 4 hours of leisure, income equals RI00, utility equals 100 utils; Bundle C: 7 hours of leisure, income equals N$100, utility equals 200 utils. Thank You !!