EBK MICROECONOMICS
5th Edition
ISBN: 9781118883228
Author: David
Publisher: YUZU
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Question
Chapter 1, Problem 1.15P
To determine
(a)
To select: the plan with the given instructions to rent the most movies possible while spending $125 per year.
To determine
(b)
To select: the plan with the given instructions to rent the most movies possible while spending $125 per year.
To determine
(c)
The number of videos rented as endogenous or exogenous variable.
To determine
(d)
The choice of plan (A, B or C) is exogenous or endogenous.
To determine
(e)
The total expenditure on videos is exogenous or endogenous.
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Question 1
Tom is trying to figure out how to supplement his student bursary of £200 per week. He is considering a part-time job at a restaurant. The wage is £8 per hour. His utility function is U(C, L) = C L where C is his consumption measured in £ per week and L his leisure, measured in hours per week. The amount of leisure time that he has left after allowing for necessary academic activities is 50 hours a week.
1. Write out Tom's budget constraint and calculate the maximum value (i.e. he works the maximum time available) and minimum value?
2. Using your results from part 1, draw Tom's budget set (horizontal axis: leisure and vertical axis: consumption).
3. Let Y= student bursary, T = total amount of leisure time and w=wage. Set up the maximisation problem and calculate optimal consumption demand and leisure as a function of his student bursary and wage.
4. For the values given in the question, work out the value for optimal leisure hours and consumption spending L* and C*.
5.…
Jia is considering whether to go out to dinner at a restaurant with her friend. The meal is expected to cost $40, Jia typically leaves a 20% tip, and an Uber will cost $5 each way. Jia values the restaurant meal at $25. Jia enjoys her friend’s company and is willing to pay $30 just to spend an evening with her. If Jia does not go out to the restaurant, she will eat at home, using groceries that cost her $8.
Auto Bull Eye offers a 10-minute oil change and 30-minute brake check. There are two technicians who perform each of these services. Next week, the shop is offering a discounted oil change. How might this affect the production possibilities curve for next week?
The shop would decrease the brake-check price to eliminate scarcity.
The shop would increase worker pay to make up for the opportunity cost of not doing brake checks.
The shop would shift production to oil changes and away from brake checks.
The shop would shift production to brake checks and away from oil changes.
Chapter 1 Solutions
EBK MICROECONOMICS
Ch. 1 - Prob. 1RECh. 1 - Prob. 2RECh. 1 - Prob. 3RECh. 1 - Prob. 4RECh. 1 - Prob. 5RECh. 1 - Prob. 6RECh. 1 - Prob. 7RECh. 1 - Prob. 1.1PCh. 1 - Prob. 1.2PCh. 1 - Prob. 1.3P
Ch. 1 - Prob. 1.4PCh. 1 - Prob. 1.5PCh. 1 - Prob. 1.6PCh. 1 - Prob. 1.7PCh. 1 - Prob. 1.8PCh. 1 - Prob. 1.9PCh. 1 - Prob. 1.10PCh. 1 - Prob. 1.11PCh. 1 - Prob. 1.12PCh. 1 - Prob. 1.13PCh. 1 - Prob. 1.14PCh. 1 - Prob. 1.15PCh. 1 - Prob. 1.16PCh. 1 - Prob. 1.17PCh. 1 - Prob. 1.18PCh. 1 - Prob. 1.19PCh. 1 - Prob. 1.20PCh. 1 - Prob. 1.21P
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