Question 3. Andre has a salary of $1000. He spend his entire budget on shoes and beers. The cost for a pair of shoes is $15 and the cost for a can of beer is $25 (i)Construct Andre's budget constraint. Place beers on the y axis (ii) Suppose Andres salary rises by 25% also suppose the price of shoes and beers each rose by 40%. Construct Andres new budget constraint and explain the difference between the new and the old budget constraints (iii)Suppose that the price of beers fell from $25 per beer to $15. Construct the new budget constraint and explain the difference between the new and old budget constraint (iv) Explain why firms operating in a monopolistically competitive market probably will not earn an economic profit in the long run (v)How is the difference between average total cost and average variable cost impacted by an increase in output?

Question 3. Andre has a salary of $1000. He spend his entire budget on shoes and beers. The cost for a pair of shoes is $15 and the cost for a can of beer is $25 (i)Construct Andre's budget constraint. Place beers on the y axis (ii) Suppose Andres salary rises by 25% also suppose the price of shoes and beers each rose by 40%. Construct Andres new budget constraint and explain the difference between the new and the old budget constraints (iii)Suppose that the price of beers fell from $25 per beer to $15. Construct the new budget constraint and explain the difference between the new and old budget constraint (iv) Explain why firms operating in a monopolistically competitive market probably will not earn an economic profit in the long run (v)How is the difference between average total cost and average variable cost impacted by an increase in output?

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Theory Of Consumer Choice

Section: Chapter Questions

Problem 1PA

See similar textbooks

Similar questions

Suppose Alphonsos town raises the price of bus tickets from 0.50 to 1 and file price of burgers rises from 2 to 4. Why is file opportunity cost of bus tickets unchanged? Suppose Alphonsns weekly spending money increases from 10 to 20. How is his budget constraint affected from all three changes? Explain.
Assume Tom is on budget constraint AC and the price of a hamburger is $4.00. Tom's monthly income is . Tom's monthly budget constraint 40 A OD B 20 Number of hamburoers per month O 80 100 160 O 240 Number of hot dogs per month
question 3 a Andre has a salary of $1000. He spends his entire budget on shoes and beers. The cost for a pair of shoes is $15 and the cost for can of beer is $25. - Construct Andre’s budget constraint (place) beers on the y-axis. - Suppose Andre’s salary rises by 25%. Also suppose that the price of shoes and beers each rise by 40%. Construct Andre’s new budget constraint. What is the difference between the new and old budget constraints? - Suppose that the price of beers fell from $25 per beer to $15. Construct Andre’s new budget constraint. What is the difference between the new and old budget constraints.
Question 3 A. Andre has a salary of $1000. He spends his entire budget on shoes and beers. The cost for a pair of shoes is $15 and the cost for can of beer is $25. - Construct Andre’s budget constraint (place) beers on the y-axis. - Suppose Andre’s salary rises by 25%. Also suppose that the price of shoes and beers each rise by 40%. Construct Andre’s new budget constraint. What is the difference between the new and old budget constraints? - Suppose that the price of beers fell from $25 per beer to $15. Construct Andre’s new budget constraint. What is the difference between the new and old budget constraints. B. Explain the relationship between the budget constraint and indifference curve at consumer optimum.
Consider Alexei who makes $1,400 per week and just won a ‘set for life’ lottery ticket whichinvolves a fortnightly payment of $10,000 for 20 years. Currently he works 35 hours per week. Nowdo the following:• Illustrate the effect of the lottery win on Alexei’s budget constraint using a fully labelleddiagram where i) the horizontal axis represents the hours of free time per week, and ii) thevertical axis represents Alexei’s weekly consumption.• Illustrate on the same diagram Alexei’s optimal decisions before and after the lottery winalong with his indifference curves.
Hannah’s wage rate is initially $10 per hour and she maximises her utility by supplying 8hours of work. Subsequently, her wage rate increases to $15 per hour and her newequilibrium position corresponds to 9 hours of work. It is noted that the income effect (IE)causes the labour supply to change by 1 hour and the substitution effect (SE) causes thelabour supply to change by 2 hours. How to draw in diagram, to show the IE and SE?
)ncob buys only milk and cookies.a. In yeor 1, Jocob earns $100, milk costs $2 perqua rt, and cooki es cost S4 per dozen. Ora\"•jacob's budget constraint.b. Now suppose that a ll prices increase by10 percent in yeor 2 ond !hot jacob's salaryincreases by 10 percent as well. Draw jacob'sn<:w budget constraint. How would Jacob'soptimnl combination of milk and cookies in year 2compare to his optimal combination in year 17
Submit All Question 26 of 60 Suppose the price of mobile apps increases. As a result, Khalil decreases the number of mobile apps he purchases. This will lead to O higher marginal utility from the last mobile app purchased. O lower marginal utility. O no change in total utility for each mobile app purchased. O an increase in total utility for each mobile app purchased. Activate Windows Go to Setti To activa Show all 7:22 PM 12/9/2021 APTOP LOGIN USERNAME Student t PASSWORD: Broward
The movement from point A to point B on the graph is caused by O a decrease in the price of the good. an increase in the price of the good. O an advance in production technology. O a decrease in input prices. price B P' quaxtity lo
a. Andre has a salary of $1000. He spends his entire budget on shoes and beers.The cost for a pair of shoes is $15 and the cost for can of beer is $25.i. Construct Andre’s budget constraint (place) beers on the y-axis. [4marks]ii. Suppose Andre’s salary rises by 25%. Also suppose that the price ofshoes and beers each rise by 40%. Construct Andre’s new budget constraint. What is the difference between the new and old budgetconstraints? [4 marks]iii. Suppose that the price of beers fell from $25 per beer to $15. ConstructAndre’s new budget constraint. What is the difference between the newand old budget constraints. [4 marks]b. Explain the relationship between the budget constraint and indifference curveat consumer optimum. [3 marks]
Tea 50 40 30 20 10 0 Tea 50 40 30 20 10 0 OC OA D Chart A 2 5 10 15 20 25 30 Scones Chart C 5 10 15 20 Tea 25 30 Scones 50 40 30- 20 10 0 Tea 50 40 30 20 10 Chart B 5 10 1 0 5 15 20 25 30 Scones Chart D Look at the figure Budget Lines for Tea and Scones. For months now. Agnes has had $20 per month to spend on tea and scones. The price of each cup of tea and each scone has been $1. Which of the charts shows what will happen to her budget line if the price of a cup of tea falls to $0.50? 10 15 20 25 30 Scones 1 pts
a. Andre has a salary of $1000. He spends his entire budget on shoes and beers. The cost for a pair of shoes is $15 and the cost for can of beer is $25. i. Construct Andre's budget constraint (place) beers on the y-axis. ii. Suppose Andre's salary rises by 25%. Also suppose that the price of shoes and beers each rise by 40%. Construct Andre's new budget constraint. What is the difference between the new and old budget constraints? Suppose that the price of beers fell from $25 per beer to $15. Construct Andre's new budget constraint. What is the difference between the new and old budget constraints. iii. b. Explain the relationship between the budget constraint and indifference curve at consumer optimum.