Suppose Alphonso’s town raises the
Why is file
How is his budget constraint affected from all three changes? Explain.
Trending nowThis is a popular solution!
Chapter 2 Solutions
Principles of Economics 2e
Additional Business Textbook Solutions
Horngren's Accounting (12th Edition)
Construction Accounting And Financial Management (4th Edition)
Principles of Accounting Volume 1
Cost Accounting (15th Edition)
Principles of Accounting Volume 2
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
- A student has a monthly budget of $120 to spend on either burrito, which cost $6 each, or sodas, which cost $4 each.Draw the student's budget constraint. Put burritos on the x-axis and sodas on the y-axis. Which combinations of burritos and sodas are unaffordable--those to the left of the line in the graph or those above the line in the graph? Why? Which combinations would leave some budget unspent - those to the left of the line in the above graph or those to the right of the line in the above graph?arrow_forwardHi, just wondering why (1+r) is shown in the budget constraint, rather than 1/(1+r)arrow_forwardMarie has a weekly budget of $24, which she likes to spend on magazines and pies. Calculate: a) If the price of a magazine is $4 each, what is the maximum number of magazines she could buy in a week? b) If the price of a pie is $12, what is the maximum number of pies she could buy in a week? c) Draw Marie’s budget constraint with pies on the horizontal axis and magazines on the vertical axis. What is the slope of the budget constraint? d) What is Marie’s opportunity cost of purchasing a pie? NOTE: To answer this question simply work your answer in a piece of paper, take a photo of it and upload the file. Remember that this is a problem solving question, hence you must show your work!arrow_forward
- Marsha has a salary of $500. He spends his entire budget on milk and cookies. The cost of a gallon of milk is $4 and the cost of a slice of cookies is $8. Construct Marsha’s budget constraint (place) cookies on the y-axis. Suppose Marsha’s salary rises by 50%. Also suppose that the price of milk and cookies each rise by 50%. Construct Marsha’s new budget constraint. What is the difference between the new and old budget constraints? Suppose that the price of cookies fell from $8 per cookie to $4. Construct Marsha’s new budget What is the difference between the new and old budget constraints. Explain the relationship between the budget constraint and indifference curve at consumer optimum.arrow_forwardSuppose Alphonso’s town raised the price of bus tickets to $1 per trip (while the price of burgers stayed at $2 andhis budget remained $10 per week.) Draw Alphonso’s new budget constraint. What happens to the opportunity costof bus tickets?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_forward
- Suppose a student’s entire weekly pocket money (income) is spent on cafeteria’s fast food and hut’s meal. Draw his (weakly) budget line if he has total amount of Rs. 1500 per week, the price of fast food is Rs. 150 per unit and the price of meal is Rs. 100 per unit. Draw the new budget lines: (a) if the price of fast food doubles; (b) if the price of meal halves; (c) if his pocket money/income rises to Rs. 2500 per week; (d) if his pocket money/income falls to Rs. 1000 per week.arrow_forwardLucas has $40 per week that he can spend on lemon soda (X) and chips (Y). The price of the lemon soda (PX) is $2 per bottle, and the price of the chips (PY) is $4 per bag. Write down Lucas’s budget constraint. Draw the budget constraint on the graph below. Make sure to indicate the intercepts and the slope of budget constraint. Label it as BC1.arrow_forwardDraw an individual choice diagram for a person choosing between buying apples or bananas with a budget constraint. Be sure to label the curves and optimizing solution set of Qb and Qa. Explain why individuals make choices that are directly on the budget constraint, rather than inside the budget constraint or outside it.arrow_forward
- 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.i. Draw Mary’s budget constraint, (put home cooked meal on the horizontalaxis) showing the trade-off between a home cooked meal and eating at arestaurant.arrow_forwardRaymond consumes meatloaves and pineapples. He has decided that hismonthly budget will be $1500. Suppose that one meatloaf costs $375, while one pineapple costs $150. Suppose Raymond decides to cut his monthly budget in half. Coincidentally, the next time he shops, he learns that meatloaves and pineapples are on sale for half price. Show what happens to Raymond’s budget line?arrow_forwardRaymond consumes meatloaves and pineapples. He has decided that his monthly budget will be $1500. Suppose that one meatloaf costs $375, while one pineapple costs $150. i. What is the expression for Raymond’s budget constraint? ii. Draw a graph of Raymond’s budget line (meatloaf on the y axis). iii. Show how Raymond’s budget line changes if the price of pineapples increases to $370. iv. Suppose Raymond decides to cut his monthly budget in half. Coincidentally, the next time he shops, he learns that meatloaves and pineapples are on sale for half price. Show what happens to Raymond’s budget line?arrow_forward
- Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStaxPrinciples of MicroeconomicsEconomicsISBN:9781305156050Author:N. Gregory MankiwPublisher:Cengage Learning
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning