Assume Isaac saw his income fall from $700 to $500 and he spends $50 per basketball...
Homework Answers
Solution: shift to the left
Explanation: Y-axis indicates the quantity, not price. Thus a fall in income causes the budget line to shift inwards i.e. left. The budget constraint pivots outward from the vertical axis states that there are more possibilities in increase in quantity
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Assume Isaac saw his income fall from $700 to $500 and he spends
$50 per basketball...
Mike has a part-time job and earns $50 per week. He spends his entire income on...
Mike has a part-time job and earns $50 per week. He spends his entire income on two goods: Hamburgers (which cost $2 each) and movie rentals (which cost $3 each). Draw Mike's budget constraint. Suppose that Mike decides to purchase 10 hamburgers and rent 10 movies this week. Is this choice within Mike's opportunity set? Show this choice on your graph.
1) Consider a poor person’s annual income of $ 1200. He spends his income only on...
1) Consider a poor person’s annual income of $ 1200. He spends his income only on vegetable and rice. The price of rice is $8/lbs. in the entire town and the price of vegetable is $12/lbs. in the town. Please draw this person’s Budget line, whereby rice is supposed to be on the horizontal Axis and vegetables on the vertical axis. a) Assume that the student considers rice and veggies neither as perfect complements, nor as perfect substitutes. Based on...
10. José gets satisfaction from both music and fireworks. José's income is $240 per week. Music...
10. José gets satisfaction from both music and fireworks. José's income is $240 per week. Music costs $12 per CD, and fireworks cost $8 per bag a. Graph the budget constraint José faces, with music on the vertical axis and fireworks on the horizontal axis. b. If José spends all his income on music, how much music can he afford? Plot a point that illustrates this scenario. c. If José spends all his income on fireworks, how many bags of...
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...
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...
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...
.6. Robert spends his income on lattes and all other goods. lattes cost $4. each. In...
.6. Robert spends his income on lattes and all other goods. lattes cost $4. each. In his income increases from $400 to $500 and the price is lattes increases to $5, which of the following are true. Assume that lattes eare on the horizontal aris and all other goods are on The vertical anis a choose one or more a Robert's LET set will increase B. Roberts budget set will shrink.. C. Roberts would be pot able t purchase the...
2. Ali has a $7 weekly budget that he spends on songs (S, SI per download)...
2. Ali has a $7 weekly budget that he spends on songs (S, SI per download) and prosein bars (B, S1 per bar). His usility information for the two products is below from songsof a song y fTotal utiliay Marginal wtilityQuantity ofTotal utility Marginal utility of a bar from bars protein bars 10 18 14 18 21 28 30 31 a) Calculate Ali's marginal utilities and finish the filling out the table b) If Ali spends his entire budget on...
Suppose Cole buys food (X) and clothing (Y) with his income of $500 per month. The prices that Co...
Suppose Cole buys food (X) and clothing (Y) with his income of $500 per month. The prices that Cole faces in month one are $2 per unit of food and $4 per unit of clothing. His utility-maximizing choice is 100 food units and 75 clothing units. His preferences are convex. Now assume that in month two, Cole's income increases by 11% to $555, the price of food increases by 5% to $2.10, and the price of clothing increases by 15%...
2) Max lives on Snickers Bars and Doritos. The price of Snickers (S) is 2 dollars...
2) Max lives on Snickers Bars and Doritos. The price of Snickers (S) is 2 dollars per bar and the price of Doritos (D) is 1 dollar per bag. Max allows himself to spend no more than 10 dollars a day on food. He also restricts his consumption to 5,000 calories per day. There are 500 calories in a Snickers Bar and 1000 calories in bag of Doritos. Assume that Max spends his entire money budget each day and consumes...
10. José gets satisfaction from both music and fireworks. José's income is $240 per week. Music costs $12 per CD, and fireworks cost $8 per bag a. Graph the budget constraint José faces, with music on the vertical axis and fireworks on the horizontal axis. b. If José spends all his income on music, how much music can he afford? Plot a point that illustrates this scenario. c. If José spends all his income on fireworks, how many bags of...
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...
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...
.6. Robert spends his income on lattes and all other goods. lattes cost $4. each. In his income increases from $400 to $500 and the price is lattes increases to $5, which of the following are true. Assume that lattes eare on the horizontal aris and all other goods are on The vertical anis a choose one or more a Robert's LET set will increase B. Roberts budget set will shrink.. C. Roberts would be pot able t purchase the...
2. Ali has a $7 weekly budget that he spends on songs (S, SI per download) and prosein bars (B, S1 per bar). His usility information for the two products is below from songsof a song y fTotal utiliay Marginal wtilityQuantity ofTotal utility Marginal utility of a bar from bars protein bars 10 18 14 18 21 28 30 31 a) Calculate Ali's marginal utilities and finish the filling out the table b) If Ali spends his entire budget on...
2) Max lives on Snickers Bars and Doritos. The price of Snickers (S) is 2 dollars per bar and the price of Doritos (D) is 1 dollar per bag. Max allows himself to spend no more than 10 dollars a day on food. He also restricts his consumption to 5,000 calories per day. There are 500 calories in a Snickers Bar and 1000 calories in bag of Doritos. Assume that Max spends his entire money budget each day and consumes...
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