Microeconomics: Principles & Policy
14th Edition
ISBN: 9781337794992
Author: William J. Baumol, Alan S. Blinder, John L. Solow
Publisher: Cengage Learning
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Chapter 5.A, Problem 2TY
To determine
(a)
The number of tacos and hot dogs purchased by Mr. P.
To determine
(b)
The change in quantity of tacos and hot dogs when income increases.
To determine
(c)
The different basket of tacos and hot dogs when price of tacos increases to $3.
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George has a fixed income and can afford at most 7 units of X if he spends his entire income on X. Alternatively, if he spends all his income on Y, he can afford at most 6 units of Y. Draw George's budget line and an indifference curve such that George chooses to buy 4 pieces of X. Martha has the same income and faces the same prices, yet she chooses to buy 2 pieces of X. In equilibrium, what is George's subjective value of X in terms of Y? What is Martha's?
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Calculate the demand for goods for Mad HatterAssume Mad Hatter has utility U = q1M * (q2M)^2. He maximises his utility given his budget constraint. He does not have any income, but can sell his endowment (12 apples, 3 bananas) to get money to buy what he wants. Calculate his demand for apples and bananas.
Please tell me which of the multiple choices in question 1.6)1.7)1.8) are correct.State only the correct ones please.
1.6)
The marginal rate of substitution (MRS) can be defined as:
Select one or more:
a. The amount of one good that the consumer is willing to trade for one unit of the other.
b. The ratio of the amounts of two goods.
c. The change in the consumer’s utility when one good is substituted for another.
d. The absolute value of the slope of the indifference curve.
1.7)
(SEE ATTACHED PICTURE)
The diagram shows that:
Select one or more:
a. If Angela works 24 hours a day she can still survive.
b. There is a technically feasible allocation where Angela does not work.
c. A new technology that produced more grain would give a larger technically feasible set.
d. If Angela needed less grain to survive the technically feasible set would be smaller.
Chapter 5 Solutions
Microeconomics: Principles & Policy
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