Homework Answers
Answer-- Robert would be able to purchase the same quantities of lattes even after the price increase.
We know that budget line is the combination of two goods where the consumer purchased for the same income and price. If both price and income increases, then there is no change in the budget set.
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.6. Robert spends his income on lattes and all other goods. lattes cost $4. each. In...
Suppose that Andrew spends all of his income on good X and good Y. Then a...
Suppose that Andrew spends all of his income on good X and good Y. Then a doubling of the price of both goods plus a tripling of his income will: Shift the budget line up and rotate it Shift the budget line down and rotate it Rotate the budget line but not shift it Shift the budget line up but not rotate it
3) (4pts. Consider a consumer who spends all his income on two goods, say 804 that...
3) (4pts. Consider a consumer who spends all his income on two goods, say 804 that good 1 is an inferior good at the current prices and income). If the price and also the income of the consumer doubles, how does his demand for good at all. Explain. all his income on two goods, say good 1 and good 2. Assume ces and income). If the price of both goods double w does his demand for good 1 change, if...
Suppose a family spends their income on two things: education (S) and all other goods, (X)....
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...
A consumer spends all of her income (Y) on two goods Z and B. The price...
A consumer spends all of her income (Y) on two goods Z and B. The price of good B (PB) is $6. The Marginal Rate of Transformation MRT is equal to minus2. That is 2 units of good B can be traded for 1 unit of good Z. This consumer is able to buy 15 units of good Z and 0 units of good B with his/her income. What is this consumer's level of income? The consumer's income is $...
. (15 marks) Rajan spends all his money on only two goods, bananas and scones. Bananas...
. (15 marks) Rajan spends all his money on only two goods, bananas and scones. Bananas cost $0.60/kg, and scones $0.50 each (assume he can purchase partial scones). (1) Sketch Rajan's budget constraint if he has an income of $20/day. (Put bananas on the horizontal axis.) Rajan has well-behaved preferences[1], and his optimal bundle contains 20 scones. b) (2) Illustrate his optimal bundle in your diagram for (a); label it A. Why is this choice optimal? What conditions does it satisfy? (2)...
Nathaniel has an income of $100 per week, which he spends on medicine and all other...
Nathaniel has an income of $100 per week, which he spends on medicine and all other goods. Assume his medicine costs $10 for each pill. Suppose the government agrees to pay half of Nathaniel’s medicine bill, so that his pills effectively cost him only $5 each. As a result, he chooses to buy 80 pills. Graphically show how the government program affects Nathaniel’s budget constraint and show his new optimal consumption bundle (labeled P*). Suppose the government ends the old...
economics Problem 2 Jon is spending his money on potatoes (R) and all other goods (C)....
economics
Problem 2 Jon is spending his money on potatoes (R) and all other goods (C). Suppose that the price of rice potatoes falls. Determine Jon's optimal consumption bundle using the tangency between his original budget line and one of his indifference curves as well as the consumption bundle after the price change, i.e., using the tangency between his new budget line and one of his indifference curves when 1. Potatoes is a normal good 2. Potatoes is an inferior...
Quick intuition check via True or False Questions 1. 2. If all prices double and income...
Quick intuition check via True or False Questions 1. 2. If all prices double and income triples, then the budget line will become steeper There are two goods. You know how much of good 1 a consumer can afford if she spends all of her income on good 1. If you knew the ratio of the prices of the two goods, then you could draw the consumer's budget line without any more information. lf good l is on the horizontal...
Question 9 1 pts Logan Roy is spending all his money income by buying mineral water...
Question 9 1 pts Logan Roy is spending all his money income by buying mineral water and popcorn. At his current consumption level, the marginal utility of mineral water is 70 and the marginal utility of popcorn is 60. The price of a bottle of mineral water is $2.00 and the price of a box of popcorn is $1.50. The utility-maximizing rule suggests that Logan should: O Increase consumption of popcorn and increase consumption of mineral water Decrease consumption of...
1) Noah likes hot dogs and Coca-Cola. Hot dogs cost $1 each and Cokes cost $.50...
1) Noah likes hot dogs and Coca-Cola. Hot dogs cost $1 each and Cokes cost $.50 per bottle There is a special promotion for Coke that will last for one month. If Noah sends in the bottle tops from the Cokes he drinks during the next month, he will get a refund of $.20 for every bottlecap beyond the first 12 that he returns. For example, if he returns 25 bottle caps he will get back $2.60 $.20(25 12). Noah...
3) (4pts. Consider a consumer who spends all his income on two goods, say 804 that good 1 is an inferior good at the current prices and income). If the price and also the income of the consumer doubles, how does his demand for good at all. Explain. all his income on two goods, say good 1 and good 2. Assume ces and income). If the price of both goods double w does his demand for good 1 change, if...
economics
Problem 2 Jon is spending his money on potatoes (R) and all other goods (C). Suppose that the price of rice potatoes falls. Determine Jon's optimal consumption bundle using the tangency between his original budget line and one of his indifference curves as well as the consumption bundle after the price change, i.e., using the tangency between his new budget line and one of his indifference curves when 1. Potatoes is a normal good 2. Potatoes is an inferior...
Quick intuition check via True or False Questions 1. 2. If all prices double and income triples, then the budget line will become steeper There are two goods. You know how much of good 1 a consumer can afford if she spends all of her income on good 1. If you knew the ratio of the prices of the two goods, then you could draw the consumer's budget line without any more information. lf good l is on the horizontal...
Question 9 1 pts Logan Roy is spending all his money income by buying mineral water and popcorn. At his current consumption level, the marginal utility of mineral water is 70 and the marginal utility of popcorn is 60. The price of a bottle of mineral water is $2.00 and the price of a box of popcorn is $1.50. The utility-maximizing rule suggests that Logan should: O Increase consumption of popcorn and increase consumption of mineral water Decrease consumption of...
1) Noah likes hot dogs and Coca-Cola. Hot dogs cost $1 each and Cokes cost $.50 per bottle There is a special promotion for Coke that will last for one month. If Noah sends in the bottle tops from the Cokes he drinks during the next month, he will get a refund of $.20 for every bottlecap beyond the first 12 that he returns. For example, if he returns 25 bottle caps he will get back $2.60 $.20(25 12). Noah...
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