Microeconomics: Principles & Policy
14th Edition
ISBN: 9781337794992
Author: William J. Baumol, Alan S. Blinder, John L. Solow
Publisher: Cengage Learning
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Question
Chapter 5.A, Problem 1TY
To determine
(a)
To draw the budget lines of Mr. J in three different scenarios.
To determine
(b)
To draw the budget lines of Mr. J in three different scenarios.
To determine
(c)
To draw the budget lines of Mr. J in three different scenarios.
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Chapter 5 Solutions
Microeconomics: Principles & Policy
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- Jane is your typical economics student who consumes two goods: economics textbook and coffee. Jane’s income is $40. She can spend it all on books and get 5 or she can spend it all on coffee and get 20 cups.Given this information, construct the equation for Jane’s budget line and plot it (put books on the x–axis and coffee on the y–axis)arrow_forwardSiobhan divides her spending between lemons and limes. If the price of lemons falls, the income effect predicts she will buy Question 15 options: Fewer limes. The same number of limes. More limes.arrow_forwardJane is your typical economics student who consumes two goods: economics textbook and coffee. Jane’s income is $40. She can spend it all on books and get 5 or she can spend it all on coffee and get 20 cups.Given this information, construct the equation for Jane’s budget line and plot it (put books on the x–axis and coffee on the y–axis) The following are bundles that Jane can afford with her income (as shown in Table 3.1):Table 3.1BooksCoffee 1- -0 -8 2- Fill in the blanks in the table with quantities that can exhaust Jane’s income. Assume that prices are the same as used in part (a). If marginal utility of a book is 20, what is the marginal utility of coffee if she is maximizing utility?arrow_forward
- Sarah 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_forwardExplain how the budget constraint might change if income and prices of all goods increased in same proportion?arrow_forwardThe 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.arrow_forward
- Paul consumes cheese and wine and his income is $200. Is it possible that when the price of one pound of cheese is $5 and the price of wine per glass is $5, Paul consumes 10 glasses of wine and 30 pounds of cheese per week, but when the price of one pound of cheese is $2 and the price of wine per glass is $10, Paul does not consume any cheese and spends all of his income on wine?arrow_forwardTheodore's budget line has changed from A to B. Which of the following explains the change in Theodore's budget line? A) The price of food increased, and the price of clothing decreased. B) The price of food and the price of clothing increased. C The price of food and the price of clothing decreased. D) The price of food decreased, and the price of clothing increased. E) none of the abovearrow_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_forward
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