MICROECONOMICS (LL)(FD)
21st Edition
ISBN: 9781260191806
Author: McConnell
Publisher: MCGRAW-HILL CUSTOM PUBLISHING
expand_more
expand_more
format_list_bulleted
Question
Chapter 7.A, Problem 2ARQ
To determine
The income per capita in DVC.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
True or false with reasoning:
1) _______When we claim that utility can be ordinally measured, we assume that the consumer is able to measure the total and marginal utility received when one extra unit of a commodity is consumed.
2)_______If MRS between two goods is constant, then having more of one good without having more of the other does not increase utility.
3)_______Marginal Utility increases until total utility is at a maximum and then marginal utility decreases.
22. Peanut butter (PB) sells for 10 dollars per pound and Oysters (O) sell for 50 dollars perpound. Suppose Pat buys 5 pounds of peanut butter and one pound of oysters each month.With this consumption bundle, his MRSP B,O = 3. Which of the following is true (assumingPat’s preferences satisfy all the basic assumptions of consumer theory)?(a) Pat could increase his utility by buying more oysters and less peanut butter.(b) Pat could increase his utility by buying more peanut butter and less oysters.(c) Pat could increase his utility by buying more peanut butter and more oysters.(d) Pat could increase his utility by buying less peanut butter and less oysters.
John’s preferences for Orange (O) and lemons (L) are represented by the funtion U(O, L)= O+2L. The oranges cost £2 and the lemons £1. Given that John’s monthly income is £30 answer the following questions:
What type of goods are oranges and lemons for John?
What is the proportion to which John is willing to exchange Oranges for Lemons?
Illustrate and solve graphically John’s utility maximization problem.
If his income increases every month by £10, how will John’s consumption choice be affected? Illustrate graphically the income expansion path and the Engel curve for each good.
How will an increase in the price of Lemons to £6 affect John’s optimal consumption choice? (John’s income is £30)
Graph John’s demand curve for each good.
Assume that John wins a voucher of £20, redeemable only in Oranges. How would this affect John’s utility? (Assume that prices and income are as described initially)
Assume that John is presented with two options: an Orange voucher of £20 or just £6 to spend…
Chapter 7 Solutions
MICROECONOMICS (LL)(FD)
Ch. 7.1 - Prob. 1QQCh. 7.1 - Prob. 2QQCh. 7.1 - Prob. 3QQCh. 7.1 - Prob. 4QQCh. 7.A - Prob. 1ADQCh. 7.A - Prob. 2ADQCh. 7.A - Prob. 3ADQCh. 7.A - Prob. 1ARQCh. 7.A - Prob. 2ARQCh. 7.A - Prob. 1AP
Ch. 7.A - Prob. 2APCh. 7.A - Prob. 3APCh. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - Prob. 3DQCh. 7 - Prob. 4DQCh. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - Prob. 8DQCh. 7 - Prob. 9DQCh. 7 - Prob. 10DQCh. 7 - Prob. 1RQCh. 7 - Prob. 2RQCh. 7 - Prob. 3RQCh. 7 - Prob. 4RQCh. 7 - Prob. 5RQCh. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7P
Knowledge Booster
Similar questions
- . Suppose that initially, bread is $2 per loaf,and cake is $2 per slice. Marie Antoinettehas $18 to spend on these items each week.At this income and those prices, Marie consumes 5 loaves of bread and 4 slices of cake.Then, the price of bread DECREASES to$1 per loaf. (The price of cake is still $2.)IF Marie’s budget had also fallen to $13so that she could still just afford her original bundle, she WOULD choose to spendthose $13 on 7 loaves of bread and 3 slicesof cake.But since Marie still has her original $18budget, she actually chooses to buy 4loaves of bread and 7 slices of cake afterthe price change.When the price of bread fell from $2 to $1,what was the substitution effect on Marie’sdemand for bread?arrow_forwardJohn likes Coca-Cola. After consuming one Coke, John has a total utility of 10 utils. After two Cokes, he has a total utility of 25 utils. After three Cokes, he has a total utility of 50 utils. Does John show diminishing marginal utility for Coke, or does he show increasing marginal utility for Coke? Supposethat John has $3 in his pocket. If Cokes cost $1 each and John is willing to spend one of his dollars on purchasing a first can of Coke, would he spend his second dollar on a Coke, too? What about the third dollar? If John’s marginal utility for Coke keeps on increasing no matter how many Cokes he drinks, would it be fair to say that he is addicted to Coke?arrow_forwardAssume Pat spends all of her allowance to purchase 4 apples and 4 candy bars. Pat's marginal utility of the fourth apple is 20 utils, and her marginal utility of the fourth candy bar is 40 utils. If an apple costs $1.00 and a candy bar $0.50, to maximize utility Pat should(A) purchase more apples and more candy bars(B) maintain the current purchase of 4 apples and 4 candy bars(C) purchase more apples and fewer candy bars(D) purchase fewer apples and more candy bars(E) purchase fewer apples and fewer candy barsarrow_forward
- Petra has $480 to spend on DVDs and books. Abook costs $24 and a DVD costs $15. [LO 7.2]a. Write an equation for the budget constraint.Let x 5 books. Let y 5 DVDs.b. Use your equation to determine how manybooks Petra can buy if she buys 8 DVDs.arrow_forward7. A consumer has preferences for coffee and pancakes that are complete, continuous, transitive, monotonic, and convex. At her current consumption bundle on the budget line, you could take away a maximum of 2 cups of coffee if you give her 5 extra pancakes without changing her utility. The price of a cup of coffee is $4, and the price of a pancake is $1. Assume you graph pancakes on the X-axis and coffee on the Y-axis. At the current consumption bundle, the bang per buck is higher for pancakes than coffee, and the consumer’s indifference curve is flatter than her budget line. a. True b. False Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardJohn likes Coca-Cola. After consuming one Coke, John has a total utility of 10 utils. After two Cokes, he has a total utility of 25 utils. After three Cokes, he has a total utility of 50 utils. Does John show diminishing marginal utility for Coke or does he show increasing marginal utility for Coke? Suppose that John has $3 in his pocket. If Cokes cost $1 each and John is willing to spend one of his dollars on purchasing a first can of Coke, would he spend his second dollar on a Coke, too? What about the third dollar? If John’s marginal utility for Coke keeps on increasing no matter how many Cokes he drinks, would it be fair to say that he is addicted to Coke? *use tables and/or graphs if possible, please original workarrow_forward
- Suppose that Omar’s marginal utility for cups of coffee is constant at 1.5 utils per cup no matter how many cups he drinks. On the other hand, his marginal utility per doughnut is 10 for the first doughnut he eats, 9 for the second he eats, 8 for the third he eats, and so on (that is, declining by 1 util per additional doughnut). In addition, suppose that coffee costs $1 per cup, doughnuts cost $1 each, and Omar has a budget that he can spend only on doughnuts, coffee, or both. How big would that budget have to be before he would spend a dollar buying a first cup of coffee?arrow_forwardThe price of DVDs (D) is $20.00 and the price of CDs (C) is $20.00. Katrina has a budget of $100.00 to spend on the two goods. Suppose that she has already bought 1 DVD and 1 CD. In addition, there are 3 more DVDs and 3 more CDs that she would really like to buy. 1.) Using the line drawing tool, given the above prices and income, draw her budget line in the figure. Label this line 'L'. 2.) Using the point drawing tool, and considering what Katrina has already purchased and what she still wants to purchase, identify the three different bundles of CDs and DVDs that she could choose. Label these points 'bundle 1', 'bundle 2', and 'bundle 3'. (Assume that she cannot purchase fractional units)arrow_forwardYou are choosing between two goods, X and Y, and your marginal utility from each is shown in the following table. Units of X MUx Units of Y MUy 1 10 1 8 2 8 2 7 3 6 3 6 4 4 4 5 5 3 5 4 6 2 6 3 a. If your income is $9 and the prices of X and Y are $2 and $1, respectively, what quantities of each will you purchase to maximize utility? ______units of X and ______units of Y b. What total utility will you realize? ______utils c. Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase? _____units of X and ______units of Y d. Using the two prices and quantities for X, complete the table to derive the demand schedule (a table showing prices and quantities demanded) for X. Instructions: Start with the highest price first Price of X Quantity Demanded of X $ $arrow_forward
- You are choosing between two goods, X and Y, and your marginal utility from each is as shown in the table below. If your income is $9 and the prices of X and Y are $2 and $1, respectively, what quantities of each will you purchase to maximize utility? What total utility will you realize? Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase? Using the two prices and quantities for X, derive a demand schedule (price–quantity-demanded table) for X.arrow_forwardKai’s current marginal utility from consuming orange juice is 50 utils per ounce and her marginal utility from consuming coffee is 50 utils per ounce. If orange juice costs $0.25 per ounce and coffee costs $0.20 per ounce, is Kai maximizing her total utility from the two beverages? Instructions: Enter your responses as whole numbers. At her current level of consumption, Kai receives: utils per dollar spent on orange juice.At her current level of consumption, Kai receives: utils per dollar spent on coffee.Therefore, Kai maximizing her total utility because MUoj/Poj is MUc/Pc. Kai’s current marginal utility from consuming orange juice is 50 utils per ounce and her marginal utility from consuming coffee is 50 utils per ounce. If orange juice costs $0.25 per ounce and coffee costs $0.20 per ounce, is Kai maximizing her total utility from the two beverages? Enter your responses as whole numbers. At her current level of consumption, Kai receives: utils per dollar…arrow_forwardExhibit 1 Total Utility for Hamburgers, Fries, and CokesTotal Utility from Hamburgers Total Utility from Fries Total Utility from Coke 1 hamburger (100 utils) 1 order of fries (30 utils) 1 Coke (40 utils) 2 hamburgers (180 utils) 2 orders of fries (50 utils) 2 Cokes (60 utils) 3 hamburgers (240 utils) 3 orders of fries (60 utils) 3 Cokes (70 utils) 3- In Exhibit1 assume that the price of hamburgers is $2 each, fries cost 50 cents each, and Cokes cost $1 each. What is the marginal utility of having a second order of fries? In Exhibit 1, assume that the price of hamburgers is $2 each, fries cost 50 cents each, and Cokes cost $1 each. Suppose the consumer has $6 to spend on hamburgers, fries, and Cokes. Which of the following meals gives the consumer the mostutility? Given a…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Microeconomics (MindTap Course List)EconomicsISBN:9781305971493Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou...EconomicsISBN:9781285165875Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou...
Economics
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning