What causes the shift in the budget below, from budget Bo to B₁? Good A B₁ Bo Good C O A decrease in the price of good C O A decrease in consumer income O An increase in the price of good C O A decrease in the price of good A
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- Marge also buys pizza for $10 and Pepsi for $2.She has income of $200. Her budget constraint willexperience a parallel outward shift ifa. the price of pizza falls to $5, the price of Pepsifalls to $1, and her income falls to $100.b. the price of pizza rises to $20, the price of Pepsirises to $4, and her income remains the same.c. the price of pizza falls to $8, the price of Pepsifalls to $1, and her income rises to $240.d. the price of pizza rises to $20, the price of Pepsirises to $4, and her income rises to $500Consider John who consumes two goods, (X and Y), with prices ?? = ?$35, ?? = ?$25 and income I =N$1500 i) Construct budget constraint and draw John’s budget line with good X on the horizontal axis. (ii) Use a graph to show the effect of an increase in income from N$1500 to N$2000. What will happen to the slope of the budget line if the price of good X decreases to N$18?12) Leyla consumes goods X and Y. The price of good X is Px and the price of good Y isPy, Leyla’s income is I. If both prices and Leyla’s income increases by 50%, then theA) budget constraint will be unchanged.B) slope of the budget constraint will increase.C) slope of the budget constraint will decrease.D) budget constraint will shift outward in a parallel fashion.E) None of the above .
- Maggie buys peanut butter and jelly, both of whichare normal goods. When the price of peanut butterrises, the income effect induces Maggie to buy_________ peanut butter and _________ jelly.a. more; moreb. more; lessc. less; mored. less; lessAdwoa purchases only pasta and salad with her income of ghc 160 a month. Assume the price of pasta is ghc 6 and the price of salad is ghc 5 each. Answer the following questions about Adwoa’s budget.i. Derive Adwoa’s budget equation and draw the line of this equationii. Using the budget line drawn in (i) show the effect of a 100 percent increase in the price pasta hold the price of salad and income constant.iii. Using the budget line drawn in (i) show the effect of a 100 percent increase in her income hold the price of pasta and salad constant.iv. What is the slope of Adwoa’s budget line? What does this mean to Adwoa?A consumer has initial income of $100 and faces prices of Px = $1 and Py = $5. Graph the budget line, and show how it changes when the price of good X increases to P1x = $5 .
- Given the following budget line pxx+pyy=m And that the slope of the budget line depends only on relative prices, show what happens to the budget line when: (a) px rises (b) m reduces (c) Both px and py rise by the same proportion (d) a consumer is given an in-kind transfer of 40 units of good y (e) the government imposes a quantity tax (t) on good y please take note of the image1. 1. Rummy has $40 a week to spend on burger and cake. The price of burger is $5 and the price of cake is $2 a slice. a. Calculate Rummy's real income in terms of cake. b. Calculate the relative price of cake in terms of burger. Calculate the equation for Amy's budget line. d. If Rummy's income increases to $60 a week and the price of burger and cake remain unchanged describe the change of his budget line. e. If the price of cake doubles while the price of burger remains at $5 and Rummy's income remains at $40 describe the change in his budget line. f. If Rummy's income is $20 and all the money spend to purchase burger, how many burger he can purchase? 2. Consider Competitive Market where Jamil is selling flowers. If Market Price is $50 answer the following FC Flowers 6 TC 445 485 300 7 8 9 530 580 10 11 635 695 Questions: i. How many flowers should he sell? ii. Calculate Jamil's Profit or Loss. iii. Find the Price at which he will shut down in the short run. iv. Find the Price at…Originally the consumer faces the budget line p1x1 + p2x2 = m. Then the price of good 1 doubles, the price of good 2 becomes 8 times larger, and income becomes 4 times larger. Write down an equation for the new budget line in terms of the original prices and income.
- Suppose a consumer has a monthly income of m = 100 which she spendson two commodities: french fries (x1) and beef jerky (x2). The price offrench fries is p1 = 2 and the price of beef jerky is p2 = 5. (e) What is the slope of the budget line? Provide an economicinterpretation of this number.(f) Because of Mad Cow Disease, the price of beef jerky increasesto $10 (lower supply of beef). On a new graph, plot the originaland new budget constraint clearly identifying how the budgetconstraint has changed. What is the new relative price of beefjerky in terms of french fries?(g) Because of severe shortages, Congress passes the Jerky ReliefAct which limits each consumer to purchase at most 5 packs ofjerky. Show on a graph how this affects the consumer’s budgetset. Answer all three.Course: MicroeconomicsConsider a consumer who has income equal to 100 and who faces prices Px = 2 and Py = 1, of 2 goods, X and Y. Consumer is in equilibrium consuming basket (X*, Y*) = (20, 60). If price of Y increases and becomes Py = 2, and income increases and becomes equal to 160, which consumption basket will consumer choose in new situation? Explain and graph
