Microeconomics (13th Edition)
13th Edition
ISBN: 9780134744476
Author: Michael Parkin
Publisher: PEARSON
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Question
Chapter 9, Problem 30APA
(a)
To determine
The budget line.
(b)
To determine
The substitution effect.
(c)
To determine
The income effect.
(d)
To determine
The affordable point.
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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…
At last time you have answered my question ,but I still have some problems want to ask you and there is not yet complete . Can you help me to use the Budget Line and Indifference Curve concepts and graph to explain to me how changes in income and prices of the goods will give rise to changes in the highest satisfaction. Does the budget line will increase too when the goods or services are increasing? The below is you have answered me at last time
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) 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?
Chapter 9 Solutions
Microeconomics (13th Edition)
Ch. 9.1 - Prob. 1RQCh. 9.1 - Prob. 2RQCh. 9.1 - Prob. 3RQCh. 9.1 - Prob. 4RQCh. 9.1 - Prob. 5RQCh. 9.2 - Prob. 1RQCh. 9.2 - Prob. 2RQCh. 9.2 - Prob. 3RQCh. 9.2 - Prob. 4RQCh. 9.3 - Prob. 1RQ
Ch. 9.3 - Prob. 2RQCh. 9.3 - Prob. 3RQCh. 9.3 - Prob. 4RQCh. 9.3 - Prob. 5RQCh. 9 - Prob. 1SPACh. 9 - Prob. 2SPACh. 9 - Prob. 3SPACh. 9 - Prob. 4SPACh. 9 - Prob. 5SPACh. 9 - Prob. 6SPACh. 9 - Prob. 7SPACh. 9 - Prob. 8SPACh. 9 - Prob. 9SPACh. 9 - Prob. 10SPACh. 9 - Prob. 11SPACh. 9 - Prob. 12APACh. 9 - Prob. 13APACh. 9 - Prob. 14APACh. 9 - Prob. 15APACh. 9 - Prob. 16APACh. 9 - Prob. 17APACh. 9 - Prob. 18APACh. 9 - Prob. 19APACh. 9 - Prob. 20APACh. 9 - Prob. 21APACh. 9 - Prob. 22APACh. 9 - Prob. 23APACh. 9 - Prob. 24APACh. 9 - Prob. 25APACh. 9 - Prob. 26APACh. 9 - Prob. 27APACh. 9 - Prob. 28APACh. 9 - Prob. 29APACh. 9 - Prob. 30APA
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Similar questions
- Consider John who consumes two goods, (X and Y), with prices ?? = ?$35, ?? = ?$25 and income I =N$1500 i) Construct budget constraint and draw John’s budget line with good X on the horizontal axis. (ii) Use a graph to show the effect of an increase in income from N$1500 to N$2000. What will happen to the slope of the budget line if the price of good X decreases to N$18?arrow_forwardUse the following data to work problems from a) to e)Income = 20$, price of cake is 4$, price of coffee is 2$ a) Calculate Amy's real income in terms of cake. b) Calculate the relative price of cake in terms of coffee. c) Calculate the equation for Amy's budget line (with coffee on the left side). d) If Amy's income increases to 35$ a week and the prices of coffee and cake remain unchanged, describe the change in her budget line. e) If the price of coffee doubles while the price of cake remains at 4$ a cup and Amy's income remains at 20$, describe the change in her budget linearrow_forwardA. Explain, using an indifference curve and a budget line, the concept of consumer equilibrium. B. What are the assumptions on which indifference curve theory is based?arrow_forward
- Adwoa purchases only pasta and salad with her income of ghc 160 a month. Assume the price of pasta is ghc 6 and the price of salad is ghc 5 each. Answer the following questions about Adwoa’s budget.i. Derive Adwoa’s budget equation and draw the line of this equationii. Using the budget line drawn in (i) show the effect of a 100 percent increase in the price pasta hold the price of salad and income constant.iii. Using the budget line drawn in (i) show the effect of a 100 percent increase in her income hold the price of pasta and salad constant.iv. What is the slope of Adwoa’s budget line? What does this mean to Adwoa?arrow_forwardSuppose you are choosing between hours of work (a bad measured on the horizontal axis) and money (a good measured on the vertical axis). a. Explain the meaning of MRS in words. b. Should your MRS be positive or negative in this case? c. Is your MRS increasing, constant or decreasing as you increase the hours of work along an indifference curve? Explain and draw some indifference curves for this example.arrow_forwardEmily is a utility maximizer. Her income is $100, which she can spend on cafeteria meals and on notepads. Each meal costs $5 and each notepad costs $2. At these prices Emily chooses to buy 16 cafeteria meals and 10 notepads. a) Draw a diagram that shows Emily’s choice using an indifference curve and her budget line, placing notepads on the vertical axis and cafeteria meals on the horizontal axis. Label the indifference curve, I1, and the budget line BL1. Make sure you calculate the endpoints of the budget constraint. b) The price of notepads falls to $1; the price of cafeteria meals remains the same. On the same diagram, draw Emily’s budget line with the new prices and label it BL2. c) Lastly, Emily’s income falls to $90. On the same diagram, draw his budget line with this income and the new prices and label it BL3. Is she worse off, better off, or equally as well off with these new prices and lower income than compared to the original prices and higher income?arrow_forward
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