Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 13.A, Problem 1SPPA
To determine
To compute:
The relative
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1. A person has $ 100 to spend on two goods X and Y whose respective prices are $3 and $5.
a. Draw the budget line.
b. What happens to the original budget line if the budget falls by 25%?
c. What happens to the original budget line if the price of X doubles?
d. What happens to the original budget line if the price of Y falls to $4?
A consumer has $200 to divide between purchasing wine and quiche. Suppose wine costs $20 per bottle if the consumer purchases up to 5 bottles. After that, it is $10 per bottle. Suppose quiche is $10 each. Please draw the budget line. Will a consumer purchase exact 5 bottles of wine? And why? (Explain it using both the graph and words)
Plot each of the bundles from parts A – C on a graph that measures avocadoes on the horizontal axis and loaves of bread on the vertical axis, connect the dots to find Matt’s budget constraint.
Show what happens to the budget constraint if his income falls to $100, (prices do not change).
Show what happens to the budget constraint if price of avocado rises to Pa = $2 per avocado, (income and price of loaves of bread did not change).
Chapter 13 Solutions
Foundations of Economics (8th Edition)
Ch. 13.A - Prob. 1SPPACh. 13.A - Prob. 2SPPACh. 13.A - Prob. 3SPPACh. 13.A - Prob. 4SPPACh. 13.A - Prob. 5SPPACh. 13.A - Prob. 1IAPACh. 13.A - Prob. 2IAPACh. 13.A - Prob. 3IAPACh. 13.A - Prob. 4IAPACh. 13 - Prob. 1SPPA
Ch. 13 - Prob. 2SPPACh. 13 - Prob. 3SPPACh. 13 - Prob. 4SPPACh. 13 - Prob. 5SPPACh. 13 - Prob. 6SPPACh. 13 - Prob. 7SPPACh. 13 - Prob. 8SPPACh. 13 - Prob. 9SPPACh. 13 - Prob. 10SPPACh. 13 - Prob. 1IAPACh. 13 - Prob. 2IAPACh. 13 - Prob. 3IAPACh. 13 - Prob. 4IAPACh. 13 - Prob. 5IAPACh. 13 - Prob. 6IAPACh. 13 - Prob. 7IAPACh. 13 - Prob. 8IAPACh. 13 - Prob. 9IAPACh. 13 - Prob. 10IAPACh. 13 - Prob. 1MCQCh. 13 - Prob. 2MCQCh. 13 - Prob. 3MCQCh. 13 - Prob. 4MCQCh. 13 - Prob. 5MCQCh. 13 - Prob. 6MCQCh. 13 - Prob. 7MCQ
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Similar questions
- Tom has $ 300 to spend on two goods: A and B. Price of A is $3 and price of B is $5. Identify the combinations of the 2 goods that will lie to the right of Tom's budget line: A. 56 units of A and 25 units of B B. 29 units of A and 49 units of B C. 50 units of A and 29 units of B D. 40 units of A and 36 units of Barrow_forwardUse Figure: Budget Lines for Tangerines and Watermelons. For some time, Albert has had $5 per month to spend on tangerines and watermelons. The price of a tangerine is $0.50, and the price of a watermelon is $0.25. Which chart shows what will happen to his budget line if his income increases to $6?arrow_forwardGraph the budget line showing all the different combinations of good ? (drawn on the horizontal axis) and good ? (drawn on the vertical axis) that can be bought given the consumer’s total income. In the graph, indicate the y-intercept and x-intercept of the budget line.arrow_forward
- The marginal utility for shoes and coffee is given below for five individuals. A pair of shoes costs $2, and a cup of coffee costs $1. Marginal Utility of Shoes Marginal Utility of Coffee Michelle 12 6 Renee 6 6 Douglas 6 3 Paul 3 6 Shannon 12 3 a. Which of these consumers are optimizing over their choices? Explain b. For those who are not, how should they adjust their spending?arrow_forwardKim has $40 per week in her entertainment budget. She splits her time between going to the movies and yoga classes. Each movie costs $10 while each yoga class costs $5. Graph Kim’s budget constraint, with movies on the x-axis and yoga on the y-axis. What is the value of the x-intercept? What is the value of the y-intercept? What is the slope of this budget constraint?arrow_forwardSarah has an income of $100. She spends all of her income on pizza and burritos. A pizza costs $10 and a burrito costs $5. However, the store where Sarah buys her burritos has a special deal. After you've bought six burritos, then you can buy each burrito for $2.50. Draw Sarah's budget line assuming burrito on x-axisarrow_forward
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