Given the following information, use a single diagram with budget line and indifference curves to model...
Given the following information, use a single diagram with budget line and indifference curves to model a consumer's choices under three scenarios. You will upload this diagram after you finish answering the following questions.
It might be helpful to graph Good 1 on the X axis and Good 2 on the Y axis.
Slope of a budget line = - price of good 2 / price of good 1.
| Budget | Price of Healthy Meals (Good 1) | Price of Unhealthy Snacks (Good 2) | |
|---|---|---|---|
| Scenario 1 | $120.00 | $6.00 | $1.50 |
| Scenario 2 | $120.00 | $6.00 | $3.00 |
| Scenario 3 | $90.00 | $6.00 | $1.50 |
Scenario 1:
- What is the X intercept? Answer
- What is the Y intercept? Answer
- What is the slope? Answer
Scenario 2:
- What is the X intercept? Answer
- What is the Y intercept? Answer
- What is the slope? Answer
Scenario 3:
- What is the X intercept? Answer
- What is the Y intercept? Answer
- What is the slope? Answer
Homework Answers
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Given the following information, use a single diagram with
budget line and indifference curves to model...
Slope of a budget line = - price of good 2 / price of good 1....
Slope of a budget line = - price of good 2 / price of good 1. Healthy Meals and Unhealthy Snacks Budget Price of Healthy Meals (Good 1) Price of Unhealthy Snacks (Good 2) Scenario 1 $80.00 $5.00 $2.00 Scenario 2 $80.00 $5.00 $1.25 Scenario 3 $120.00 $5.00 $2.00 What is the X intercept? What is the Y intercept? What is the slope?
Slope of a budget line = - price of good 2 / price of good 1....
Slope of a budget line = - price of good 2 / price of good 1. Healthy Meals and Unhealthy Snacks Budget Price of Healthy Meals (Good 1) Price of Unhealthy Snacks (Good 2) Scenario 1 $80.00 $5.00 $2.00 Scenario 2 $80.00 $5.00 $1.25 Scenario 3 $120.00 $5.00 $2.00 Scenario 3: What is the X intercept? What is the Y intercept? What is the slope?
In the following diagram, we show one of Jane's indifference curves and her budget line a. If the price of good...
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The graph shows Tom’s budget line and indifference curve for good x and y. The price...
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In the diagram on the right the consumer's original budget line is L1, and the consumer buys the amount of good X a...
In the diagram on the right the consumer's original budget line is L1, and the consumer buys the amount of good X at point A. Then the price of good X decreases dramatically so that the consumer's new budget line shifts to L2. After the price decrease the consumer buys the amount of good X at point C. The substitution effect due to the price change is the movement from pointto point
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Consider a consumer in a two commodity world whose indifference map is such that the slope of the indifference curves is everywhere equal to -(Y?X), where Y is the quantity of good Y measured along the vertical axis, and X is the quantity of good X measured along the horizontal axis. a. what is the value of the optimum Marginal Rate of Substitution for this consumer, given that the price of X is $1, the price of Y is $3...
Suppose a consumer has budget of $120 per week to spend on food. Consumer can choose...
Suppose a consumer has budget of $120 per week to spend on food. Consumer can choose to eat at restaurants (R), in which case he spends about $20 per meal (P $20), or spend his money on All-Other-Food (PAOP $1) 2. a. Ilustrate consumer's budget line. Plot R on the horizontal axis. b. If consumer's utility function is U-R AOF, what will be his optimal bundle? What would be the value of his utility at optimal bundle? How much money...
3. (3 Points) Intuitively describe what the slope of the budget line tells us about the...
3. (3 Points) Intuitively describe what the slope of the budget line tells us about the consumer's ability to trade goods X and Y. 4. (6 Points) For each description of a change in the budget line given below, state which of the following increases or decreases for the budget constraint variables would cause it: † Px + PxPy. Pytw, and I W. (a) The budget line rotates inward around its horizontal intercept (meaning that it's horizontal intercept does NOT...
Please explain. Q7: The following figure shows the indifference curves and budget constraint of a consumer....
Please explain.
Q7: The following figure shows the indifference curves and budget constraint of a consumer. De- termine the commodity bundle that will maximize the consumer's satisfaction given his budget. Why is the bundle the optimal choice? Good 1 Budget Constraint 0 1 2 3 4 5 6 7 8 9 10 Good 2
In the following diagram, we show one of Jane's indifference curves and her budget line a. If the price of good X is $100, what is her income? b. What is the equation for her budget line? c. What is the slope of her budget line? d. What is the price of good Y? e. What is Jane's marginal rate of substitution in cquilibrium? 8. Good X 40 80 0 Good Y
In the following diagram, we show one of...
In the diagram on the right the consumer's original budget line is L1, and the consumer buys the amount of good X at point A. Then the price of good X decreases dramatically so that the consumer's new budget line shifts to L2. After the price decrease the consumer buys the amount of good X at point C. The substitution effect due to the price change is the movement from pointto point
In the diagram on the right the consumer's...
Suppose a consumer has budget of $120 per week to spend on food. Consumer can choose to eat at restaurants (R), in which case he spends about $20 per meal (P $20), or spend his money on All-Other-Food (PAOP $1) 2. a. Ilustrate consumer's budget line. Plot R on the horizontal axis. b. If consumer's utility function is U-R AOF, what will be his optimal bundle? What would be the value of his utility at optimal bundle? How much money...
3. (3 Points) Intuitively describe what the slope of the budget line tells us about the consumer's ability to trade goods X and Y. 4. (6 Points) For each description of a change in the budget line given below, state which of the following increases or decreases for the budget constraint variables would cause it: † Px + PxPy. Pytw, and I W. (a) The budget line rotates inward around its horizontal intercept (meaning that it's horizontal intercept does NOT...
Please explain.
Q7: The following figure shows the indifference curves and budget constraint of a consumer. De- termine the commodity bundle that will maximize the consumer's satisfaction given his budget. Why is the bundle the optimal choice? Good 1 Budget Constraint 0 1 2 3 4 5 6 7 8 9 10 Good 2
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