EBK PRINCIPLES OF MICROECONOMICS
7th Edition
ISBN: 8220101472380
Author: Mankiw
Publisher: CENGAGE L
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Question
Chapter 21, Problem 5PA
Subpart (a):
To determine
The budget constraint of a person.
Subpart (b):
To determine
The budget constraint of a person.
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Students have asked these similar questions
Eric buys only milk and cookies. In year 1, Eric earns $90, milk costs $2 per quart, and cookies cost $3 per dozen. Use the green line (triangle symbol) to draw Eric's budget constraint on the following graph.
Now suppose that all prices increase by 10 percent in year 2 and that Eric's salary increases by 10 percent as well.
Use the blue line (circle symbol) to draw Eric's new budget constraint on the preceding graph.
True or False: Eric will consume more milk and fewer cookies in year 2 than in year 1.
True
False.
Jim buys only milk and cookies.
a. In year 1, Jim earns $100, milk costs $2 per quart,
and cookies cost $4 per dozen. Draw Jim's budget
constraint.
b. Now suppose that all prices increase by 10 percent
in year 2 and that Jim's salary increases by
10 percent as well. Draw Jim's new budget
constraint. How would Jim's optimal combination
of milk and cookies in year 2 compare to his
optimal combination in year 1?
Jim buys only milk and cookies. a. In year 1, Jim earns $100, milk costs $2 per quart, and cookies cost $4 per dozen. Draw Jim’s budget constraint. b. Now suppose that all prices increase by 10 percent in year 2 and that Jim’s salary increases by 10 percent as well. Draw Jim’s new budget constraint. How would Jim’s optimal combination of milk and cookies in year 2 compare to his optimal combination in year 1?
Could you please provide me in details answer?
Chapter 21 Solutions
EBK PRINCIPLES OF MICROECONOMICS
Ch. 21.1 - Prob. 1QQCh. 21.2 - Prob. 2QQCh. 21.3 - Prob. 3QQCh. 21.4 - Prob. 4QQCh. 21 - Prob. 1CQQCh. 21 - Prob. 2CQQCh. 21 - Prob. 3CQQCh. 21 - Prob. 4CQQCh. 21 - Prob. 5CQQCh. 21 - Prob. 6CQQ
Ch. 21 - Prob. 1QRCh. 21 - Prob. 2QRCh. 21 - Prob. 3QRCh. 21 - Prob. 4QRCh. 21 - Prob. 5QRCh. 21 - Prob. 6QRCh. 21 - Prob. 7QRCh. 21 - Prob. 1PACh. 21 - Prob. 2PACh. 21 - Prob. 3PACh. 21 - Prob. 4PACh. 21 - Prob. 5PACh. 21 - Prob. 6PACh. 21 - Prob. 7PACh. 21 - Prob. 8PACh. 21 - Prob. 9PACh. 21 - Prob. 10PACh. 21 - Prob. 11PACh. 21 - Prob. 12PACh. 21 - Prob. 13PA
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- Joseph earns $200 per week and spends his entire income on cheese which cost $5 per pound and crackers which cost $ 2 per box. Draw Josephs budget constraint. If the price of cheese increases to $8 per pound, what will happen to Josephs budget constraint?arrow_forwardPeter loves spicy food. He consumes both Laoganma chili crisp and Texas Pete hot sauce. His annual budget curve maps from (20 bottles of Laoganma, 0 cups of Texas Pete) to (0 bottles of Laoganma, 24 bottles of Texas Pete). a) Draw his budget constraint. Express the price of Texas Pete, in terms relative to the price of Laoganma. b) Given this set up, would Peter ever consume at the following points of (#bottles of Laoganma, #bottles of Texas Pete)? Why/why not? If we would consume at this point, draw an indifference curve that would justify this decision.i) (12, 12) ii) (6, 15) iii) (6, 6) iv) (12, 10) c) Imagine that Peter consumes 4 bottles of Laoganma. How many bottles of Texas Pete will he consume?d) Now imagine that the price of Texas Pete doubles. Draw the new budget constraint in Laoganma / Texas Pete space. e) Assume Peter goes from the consumption point found in part c of this question to a new point where he consumes 5 bottles of Laoganma to some new consumption point defined…arrow_forwardBy definition, a budget constraint shows the consumption bundles that a consumer can afford. Assume that a college student spends her income on mac-n-cheese and CDs. The price of one box of mac-n-cheese is $1.00, and the price of one CD is $10.00. If she has $90 of income, she could choose to consume 30 boxes of mac-n-cheese and 7 CDs 25 boxes of mac-n-cheese and 6 CDs 25 boxes of mac-n-cheese and 8 CDs 10 boxes of mac-n-cheese and 9 CDsarrow_forward
- suppose you have a fixed income of $3000 per month and you want to allocate your budget between two products: X and Y. Let's say the price of good x is $10 per unit, and the price of good y is $20 per unit. What is the budget constraint? Draw it on a graph and label the intercepts and the slope.arrow_forwardAssume that Sara has $800 per month to divide between playing golf and playing paint ball . Assume Golf costs $40 and paintball costs $80 . Suppose Sara plays golf eight times per month and plays paintball six times per month . Draw Sara’s budget constraint Assume Sara has new expenses and can spend $320 only this month. Draw the new budget constraint As a result of a decrease in income Sara decides to play 11 rounds of golf and two games of paintball . what kind of a good is paintball ? what kind of a good is golf? Assume Sara has $400, the price of paintball is still $40 , but the price of Golf doubles , draw the new budget constraintarrow_forwardRobinson makes $200 a week and spends his entire income on running shoes and basketball shorts. Write down the algebraic expression for his budget constraint if running shoes and basketball shortscost $20 each. How many of each good will he buy?        2. Write down the algebraic expression for Mr. Robison’s budget constraint if the price of basketball shorts rises to $30 each. How many of each good will he buy?arrow_forward
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