EBK MICROECONOMICS
5th Edition
ISBN: 9781118883228
Author: David
Publisher: YUZU
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Question
Chapter 4, Problem 4.13P
To determine
(A)
To plot:
On the graph the budget line of the individual with round trips on horizontal axis and other goods on vertical axis.
To determine
(B)
To plot:
A group on indifference
To determine
(C)
Toplot:
A new graph with the same budget line and also, draw three new indifference curves on that graph showing the worse off position of the individual with the frequent flyer program.
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The graph shows two budget lines and six consumption points (A, B, C, D, E, and F) for Pepsi and Dr Pepper. Note that budget line 1 is before the increase in Fred's income, whereas budget line 2 is after the increase in Fred's income.
Assume that the consumer, Fred, attempts to maximize his utility and exhausts his budget on the two goods.
If Fred's income increases, the movement from point A to point
E
is consistent with Pepsi being a normal good and Dr Pepper being an inferior good.
If Fred's income increases, the movement from point A to point
B
is consistent with Dr Pepper being a normal good and Pepsi being an inferior good.
Megan
is a college student who consumes food and transportation. Last year, she consumed 90 meals and purchased 100 gallons of gasoline per month. Suppose that last year the price of a meal was
$5
and the price of a gallon of gasoline was
$2.23.
However, this year, the price of a meal is
$6
and the price of a gallon of gasoline is
$3.92.
As a result,
Megan
consumes 100 meals and 80 gallons of gasoline. For this example, assume
Megan's
utility this year is the same as her utility last year (and that her preferences have not changed).
Calculate a Laspeyres cost-of-living index for
Megan
using 100 as the base for last year. In particular, the Laspeyres index for this year is
nothing.
(Enter
your response rounded to two decimal
places.)
Sienna gets a total of 20 utils per week from her consumption of pizza and a total of 40 utils per week from her consumption of yogurt. The price of pizza is $1 per slice, the price of yogurt is $1 per cup, and she consumes 10 slices of pizza and 20 cups of yogurt each week. Which of the following statements is correct regarding Sienna's current consumption of pizza and yogurt?
Sienna should eat more yogurt and less pizza, as she is getting more utils from the $20 spent on yogurt than from the $10 spent on pizza.
Sienna should eat more pizza and less yogurt, as she is getting more utils from her last dollar spent on pizza than her last dollar spent on yogurt.
We cannot determine if Sienna is maximizing her total utility with the information provided.
Sienna should eat more yogurt and less pizza, as she is getting more utils from her last dollar spent on yogurt than her last dollar spent on pizza.
Chapter 4 Solutions
EBK MICROECONOMICS
Ch. 4 - Prob. 1RECh. 4 - Prob. 2RECh. 4 - Prob. 3RECh. 4 - Prob. 4RECh. 4 - Prob. 5RECh. 4 - Prob. 6RECh. 4 - Prob. 7RECh. 4 - Prob. 8RECh. 4 - Prob. 9RECh. 4 - Prob. 10RE
Ch. 4 - Prob. 4.1PCh. 4 - Prob. 4.2PCh. 4 - Prob. 4.3PCh. 4 - Prob. 4.4PCh. 4 - Prob. 4.5PCh. 4 - Prob. 4.6PCh. 4 - Prob. 4.7PCh. 4 - Prob. 4.8PCh. 4 - Prob. 4.9PCh. 4 - Prob. 4.10PCh. 4 - Prob. 4.11PCh. 4 - Prob. 4.12PCh. 4 - Prob. 4.13PCh. 4 - Prob. 4.14PCh. 4 - Prob. 4.15PCh. 4 - Prob. 4.16PCh. 4 - Prob. 4.17PCh. 4 - Prob. 4.18PCh. 4 - Prob. 4.19PCh. 4 - Prob. 4.20PCh. 4 - Prob. 4.21PCh. 4 - Prob. 4.22PCh. 4 - Prob. 4.23PCh. 4 - Prob. 4.24PCh. 4 - Prob. 4.25PCh. 4 - Prob. 4.26PCh. 4 - Prob. 4.27PCh. 4 - Prob. 4.28PCh. 4 - Prob. 4.29PCh. 4 - Prob. 4.30P
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