12. Wayne has $2,000 dollars to spend on Grey Cup football tickets (measured in numbers along the horizontal axis) and on other goods (measured in dollars on the vertical axis). His preferences and budget line are represented in the figure below. Wayne's optimal choice is to buy 4 tickets, but the maximum he can buy from the box office is just two tickets. What is the box office price for a ticket? $ willing to pay a scalper for two more tickets? $ What is the maximum price Wayne is other goods (S) 2,000 1,600 1,200 800 400 2. 4 10 Number of Grey Cup Tickets

12. Wayne has $2,000 dollars to spend on Grey Cup football tickets (measured in numbers along the horizontal axis) and on other goods (measured in dollars on the vertical axis). His preferences and budget line are represented in the figure below. Wayne's optimal choice is to buy 4 tickets, but the maximum he can buy from the box office is just two tickets. What is the box office price for a ticket? $ willing to pay a scalper for two more tickets? $ What is the maximum price Wayne is other goods (S) 2,000 1,600 1,200 800 400 2. 4 10 Number of Grey Cup Tickets

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Julia has usual preferences over X and Y, and, at current prices and income, she spends 1/2 of her income on X. Her demands for both goods respond to changes in her income, but at current prices and income the income elasticity of her demand for Y is equal to exactly 1/3 times the value of her income elasticity of demand for X. And do you know what? If the price of Y were to go up by 1 percent, the quantity of X she demands would remain unchanged. a. If the price of X were to fall, would her demand for X increase, decrease or remain unchanged? More precisely, what is the own-price elasticity of her demand for X? b. If her income were to rise, would her demand for X rise, fall or remain unchanged? More precisely, what is the income elasticity of her demand for X?
Lucas chooses between water and all other goods. If he spends all his money on water, he can buy 15 thousand gallons per week. At current prices, his optimal bundle is e1, where he buys both types of goods. Show e1 in a diagram. During a drought, the government limits the number of gallons per week that he may purchase to 10 thousand. Using diagrams, discuss under which conditions his new optimal bundle, e2, will be the same as e1. If the two bundles differ, can you state where e2 must be located relative to e1?
2. Muhammad's demand for fresh fish is perfectly income inelastic, and his income increases. If Muhammad's preferences for fish are well-behaved, show the effect of this increase in income on the change in his optimal choice of fresh fish, his expenditure on all other goods, and draw his income-consumption curve. Clearly label your graph.
Draw YOUR indifference curve for the consumption of two goods (you pick the goods – be creative!) Make sure to include labels. Why did you choose these two goods? Why do you view these as being a tradeoff? Carefully explain why the indifference curve has the shape you created. (Hint: Discuss the slope. What it means and how it changes) Determine a budget that will be allocated towards your consumption of these two goods. Given the budget, prices for the goods, and your preferences, how will you find the utility-maximizing combination? Give an intuitive answer as well as a graphical answer (make sure to label the graph accordingly).
Antonio buys five new college textbooks during his first year at school at a cost of $80 each. Used books cost only $50 each. When the bookstore announces that there will be a 10% increase in the price of new books and a 5% increase in the price of used books, Antonio's father offers him $40 extra. level? a. What happens to Antonio's budget line? Illustrate the change with new books on the vertical b. Is Antonio worse or better off after the price change? Explain.
I am studying for a midterm and would like help explaining the questions. Suppose Craig considers oranges and grapefruits to be perfect substitutes. Craig is willing to trade three (3) oranges for one (1) grapefruit. Craig has $24 to spend on oranges and grapefruits, and the price of oranges is PO = $1.00, and the price of grapefruits is PG = $2.00. On a graph, draw Craig’s Budget Constraint, identify Craig’s optimal bundle, and draw the Indifference Curve that goes through that bundle. Please put the quantity of oranges (O) on the vertical axis, and the quantity of grapefruits (G) on the horizontal axis. Make sure your graph is accurate and properly labeled and be sure to clearly indicate which is Craig’s Budget Constraint and which is Craig’s Indifference Curve.
Antonio likes to have coffee (C) and donuts (D) for breakfast every morning. He likes to dip his donuts into his coffee, so for every cup of coffee, he eats one and a half donuts. In economic terms, we can say he views one cup of coffee as a perfect complement to one and a half donuts. The price of a cup of coffee is $4.5 and the price of one donut is $2. His budget for breakfast this month is $75. (a) Write down a utility function that represents Antonio's preferences over (cups of) coffee (C) and donuts (D). (There may be many functions representing the same preferences, so you can choose either of them.) (b) How many cups of coffee (C) and donuts (D) is he going to consume? (Hint: the first order conditions will not help; draw the budget constraint and the indifference curves and look at the highest indifference curve that has a point in common with the budget constraint). (c) What is the exact value of Antonio's indirect utility for the utility function you chose in (a)?
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4 .please show all calculations Draw a budget line with good X on the x-axis and Good Y on the Y axis. Graphically illustrate the effect of an increase in the price of good X on the utility maximizing quantity of X consumed. Make sure you identify the income effect and the substitution effect. Assume that the good is a normal good
3) Indifference Curves and budget lines. a) Using a properly labeled indifference graph for good X (horizontal axis) and Good Y, illustrate how the indifference curves and budget lines would look to achieve a normal downward sloping demand curve for Good X. Also show the demand curve for good X on a properly labeled graph. b) Explain what is happening with the substitution effect and income effect. c) Explain how these effects (sub and inc) would differ if the demand curve was very elastic. (consider the slope of the curve).
The following graph shows Hilary's weekly demand for cheesecake, represented by the blue line. Point A represents a point along her weekly demand curve. The market price of cheesecake is $3.00 per slice, as shown by the horizontal black line From the previous graph, you can tell that Hilary is willing to pay $_______ for her 8th slice of cheesecake each week. Because she has to pay only$3.00 per slice, the consumer surplus she gains from the 8th slice of cheesecake is $_______. Suppose the price of cheesecake were to fall to $2.25 per slice. At this lower price, Hilary would receive a consumer surplus of $_______.from the 8th slice of cheesecake she buys.The following graph shows the weekly market demand for cheesecake in a small economy. Use the purple point (diamond symbol) to shade the area representing consumer surplus when the price (P) of cheesecake is $3.00 per slice. Then, use the green point (triangle symbol) to shade the area representing additional consumer surplus when the…
Suppose that Mr. Umais spends his entire income on good X and Y. The marginal utility of each commodity is recorded in the table below. If the price of X is Rs. 100 and price of Y is 500 and mr. Umais has an income of Rs. 1000 per month. How many units of each good should he purchase? Units of X and Y MU x MU y 1 20 50 2 18 45 3 16 40 4 13 35 5 10 30 6 6 25 7 4 20 8 2 15 a. (X, Y) = (5, 0) b. (X, Y) = (5, 5) c. (X, Y) = (0, 5) d. cannot be determined