Economics: Principles and Policy (MindTap Course List)
13th Edition
ISBN: 9781305280595
Author: William J. Baumol, Alan S. Blinder
Publisher: Cengage Learning
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Question
Chapter 5.A, Problem 1TY
(a)
To determine
Construct a budget line at income $100 and
(b)
To determine
Construct a budget line at income $150 and price $2 for each unit of Taco and Hot Dogs.
(c)
To determine
Construct budget line at income $100 and price $2 is for Hot Dogs and $2.50 is for Taco.
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John Q. Public spends all of his income on gasoline and hot dogs. Draw his budget line under several conditions: a. His income is $100, and one gallon of gasoline and one hot dog each cost $2. b. His income is $150, and the two prices remain the same. c. His income is $100, hot dogs cost $2 each, and gasoline costs $2.50 per gallon.
Jeremy has a monthly income of $60. He spends his money making telephone calls (good ?, measured in minutes) at a price of ?? and on other composite good ?, whose price has been normalized to one, meaning ?? = $1. His mobile phone company offers him two plans: plan A, in which he pays no monthly fee and makes calls for $0.50 per minute, or plan B, in which he pays a $20 monthly fee and benefits from cheaper phone calls at $0.20 per minute.(a) Depict Jeremy’s budget constraint under each of the two plans, with the number of phone calls (good ?) in the horizontal axis and the composite good (good ?) in the vertical axis. (b) If Jeremy mentioned that plan A is better for him, what is the set of consumption bundles he may purchase if his behavior is consistent with WARP?
1. 1. Rummy has $40 a week to spend on burger and cake. The price of burger is $5 and the price of cake is $2 a slice. a. Calculate Rummy's real income in terms of cake. b. Calculate the relative price of cake in terms of burger. Calculate the equation for Amy's budget line. d. If Rummy's income increases to $60 a week and the price of burger and cake remain unchanged describe the change of his budget line. e. If the price of cake doubles while the price of burger remains at $5 and Rummy's income remains at $40 describe the change in his budget line. f. If Rummy's income is $20 and all the money spend to purchase burger, how many burger he can purchase? 2. Consider Competitive Market where Jamil is selling flowers. If Market Price is $50 answer the following FC Flowers 6 TC 445 485 300 7 8 9 530 580 10 11 635 695 Questions: i. How many flowers should he sell? ii. Calculate Jamil's Profit or Loss. iii. Find the Price at which he will shut down in the short run. iv. Find the Price at…
Chapter 5 Solutions
Economics: Principles and Policy (MindTap Course List)
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