1) You make $2,000 a month. You can spend this income on two goods: food, which...
You have $150 to spend on food and clothing. The price of food and clothing are $5 and $15 respectively. (a) Write down the equation for the budget line, and graph it. (b) Suppose that the government subsidizes clothing such that each unit of clothing is half-price, up to the rst 6 units of clothing. More than 6 units of clothing purchase is still priced at $15 per unit. Write down the equation for the budget line under this subsidy,...
2. Suppose that Jesse earns $1,000 per month which she allocates between food and other goods. Assume that the average price of a unit of food is $5 and the price of other goods as $1. Currently, she maximizes her utility by purchasing 25 units of food each month. [5] a. With other goods on the y-axis and food on the x-axis, illustrate Jesse's budget constraint and an indifference curve at her optimal bundle. Label all relevant values. b. In...
. A family in Ethiopia has $100 to spend on food and all other goods for the entire year of 2018. The price of food is $2.00 per kilogram (let’s assume that all food is the same). The price of all other goods is $1.00 per unit. Write the equation for the household’s budget constraint for the year, with income on the left-hand side of the equation. Fill in the following chart so that the quantity purchased on each horizontal...
Q11. Consider a family with a cash income of $1,000 per month. With food on the horizontal axis and income on the vertical axis, and assuming the price of food is $1: (a) Illustrate the equilibrium of a family who spends 60% of their income on food. (b) Suppose now this family is eligible for food stamps: It pays $200 per month to obtain $600 worth of food. Draw this family's new budget constraint. (c) Illustrate the family’s new equilibrium...
Problem 1 You have an income of $50 to spend on two commodities. The price of commodity 2 is constant at $1. Assume that whatever you purchase, you must consume 1. The price of commodity 1 is $2 for the first 15 units, but $1 for each additional unit exceeding 15. Draw the budget set. 2. Suppose now that the price of good 1 is constant at $2. The government taxes $2 per unit on commodity 1 and 5% per...
1. (24 total points) Suppose a consumer’s utility function is given by U(X,Y) = X1/2*Y1/2. Also, the consumer has $72 to spend, and the price of Good X, PX = $4. Let Good Y be a composite good whose price is PY = $1. So on the Y-axis, we are graphing the amount of money that the consumer has available to spend on all other goods for any given value of X. a) (2 points) How much X and Y...
Suppose a family spends their income on two things: education (S) and all other goods, (X). The family earns $60,000 a year. A unit of education costs $10,000 and a unit of other goods costs $15,000. a) Write the equation for the family’s budget constraint. b) Draw the family’s budget constraint. Put education spending on the x-axis and spending on all other goods on the y-axis. c) The local government opens a public school, which offers $20,000 worth of education...
If your income is 100k/wk, you need to allocate your income on food and other goods. Suppose the price of food is $10/unit; draw the budget line for composite goods, the money spent on others, and quantity of food. Determine the slope of budget line. If you had a bundle at which MB = 15, how would you change your bundle to increase your satisfaction.
uestion 1) 2 points .Suppose a person wants to allocate income () between two products H (on the horizontal axis) and S (on the vertical axis) are given: PH-1:Ps-8:1-100: a. Write the equation of the budget line b. Compute the horizontal intercept& write the interpretation of it c. Compute the vertical intercept& write the interpretation of it d. Compute the slope and write the interpretation of it Question 2) 2 points .Consider information in question 1 to be the baseline...
Ch 2 TUTORIAL) For all of the following scenarios assume that you have income of $1000. LABEL ALL RELEVENT POINTS! (it is best if you used MULTIPLE COLORS) 1) Consider a world where there are only Bagels (x-axis) and Pogo Sticks (y-axis). A bagel costs $5 and a Pogo Stick Costs $100. Draw this Budget Constraint and label it BC1. 2) If the price of a Pogo Stick drop to $50, draw a second line for this Budget Constraint called...