Principles of Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
12th Edition
ISBN: 9780134421315
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 6, Problem 1.3P
(a)
To determine
The budget constraint.
(b)
To determine
The budget constraint.
(c)
To determine
The budget constraints
(d)
To determine
The budget constraint when the price golf increases.
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(18 points)  Suppose you have $30 and you are going to rent some movies and buy some sodas. Suppose movie rentals are $6.00 each and sodas are $1.00 each. Your original consumption bundle is 3 movies and 12 sodas. Show all calculations. (Hint: put movie rentals on the X axis)
(2 points) Draw your budget line showing the different combinations of Movies that you can rent and sodas that you can purchase.
(2 points) Suppose that movie rentals turn out to be half off ($3.00). Draw your new budget line on the same graph.
(4 points) Draw the income compensated budget line and show the calculation for the income compensated budget line
(2 points) Draw an indifference curve tangent to your original budget line at your original purchase point.
(2 points) Draw an indifference curve showing where you will purchase at the new prices
(6 points) Breakdown the shift from the original point of consumption to the new point of consumption using the income and substitution effects. Please provide a…
Suppose you have $30 and you are going to rent some movies and buy some sodas. Suppose movie rentals are $6.00 each and sodas are $1.00 each. Your original consumption bundle is 3 movies and 12 sodas. (Hint: put movie rentals on the X axis)
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a)Draw your budget line showing the different combinations of Movies that you can rent and sodas that you can purchase.
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b)Suppose that movie rentals turn out to be half off ($3.00). Draw your new budget line on the same graph.
Anna is a Vancouverite who starts off her day drinking either a coffee or a bubble tea. From her part-time job, she has earned P15 that she can spend on either coffee or bubble tea over a month. A coffee costs P1, and a bubble tea costs P1.
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Draw her budget line, with bubble tea on the y-axis. If she chooses to drink only coffee or only bubble tea for one month, how many of each can she drink?
Chapter 6 Solutions
Principles of Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
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- Suppose you have $30 and you are going to rent some movies and buy some sodas. Suppose movie rentals are $6.00 each and sodas are $1.00 each. Your original consumption bundle is 3 movies and 12 sodas. (Hint: put movie rentals on the X axis) a)   (2 points) Draw your budget line showing the different combinations of Movies that you can rent and sodas that you can purchase. b) Suppose that movie rentals turn out to be half off ($3.00). Draw your new budget line on the same graph. c)  Draw the income compensated budget line d)   Draw an indifference curve tangent to your original budget line at your original purchase point. e)  Draw an indifference curve showing where you will purchase at the new prices F) Breakdown the shift from the original point of consumption to the new point of consumption using the income and substitution effects. Please provide a detailed explanation in addition to the graph. You will need to draw a third indifference curve.  Please do e and f. If…arrow_forward2. David gets $3 per week as an allowance to spend any way he pleases. Since he likes only peanut butter and jelly sandwiches, he spends the entire amount on peanut butter (at $0.05 per ounce) and jelly (at $0.1 per ounce). Bread is provided free of charge by a concerned neighbor. David is a picky eater and makes his sandwiches with exactly 1 ounce of jelly and 2 ounces of peanut butter. He is set in his ways and will never change these proportions. a) How much peanut and jelly will David buy with his $3 allowance per week? b) Suppose the price of jelly increases to $0.15 per ounce. How much of each commodity would be bought? c) By how much should David’s allowance be increased to compensate for the rise in the price of jelly in part b? d) Graph your results of part a through part c. 1 e) In what sense does this problem involve only a single commodity? Graph the demand curve for this single commodity. f) Discuss the results of this problem in terms of the income and substitution…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 . a. Draw Sara’s budget constraintb. Assume Sara has new expenses and can spend $320 only this month. Draw the new budget constraintc. 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?d. Assume Sara has $400, the price of paintball is still $40 , but the price of Golf doubles , draw the new budget constraintarrow_forward
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