5) Below is John's indifference map for juice and snacks. Also shown are three budget lines resulting from different snack prices and assuming he has $20 to spend on these goods. (Hint: Be aware that we put price of product (snacks) on the Y-axis to draw demand curve.) Juice 20 15. 134 10- 5710 20 Snacks Which of the following points are on John's demand curve for snacks? a) p=2,q=10 b) p=2,q=13 c) p = 2,q=5 d) p=1, q=20

5) Below is John's indifference map for juice and snacks. Also shown are three budget lines resulting from different snack prices and assuming he has $20 to spend on these goods. (Hint: Be aware that we put price of product (snacks) on the Y-axis to draw demand curve.) Juice 20 15. 134 10- 5710 20 Snacks Which of the following points are on John's demand curve for snacks? a) p=2,q=10 b) p=2,q=13 c) p = 2,q=5 d) p=1, q=20

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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CS 11 Economics
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4. Tim wants to maximise his utility given his utility function of U (A, B) = A² B¹. He faces the following prices and income: PA = 25; PB = 20; M = 250. However, a change in the price of good A to PA 22 will change his optimal bundle. If he is only interested in being able to consume his original bundle of goods, how much income would he need after the price change? = (a) Tim would require £54 less income (b) Tim would require £18.33 more income (c) Tim would require £10 less income (d) Tim would require £16.66 more income (e) Tim would require £16.66 less income
5) Consider indifference curves for the consumption of milk and chocolates (you may assume that both are 'goods'). The indifference curves are drawn with the number of chocolate bars on the horizontal axis and pints of milk on the vertical axis. Suppose that at every point, consumer A's indifference curve is flatter than consumer B's. What can you conclude about consumers A and B tastes and preferences?
4. Suppose that a consumer with the utility function U =X0.25 Y0.75 choses a bundle where X=5 and Y=10. If the prices of the two goods are Px= $1, and Py = $3. Calculate marginal utility per dollar spent on each good. Can this consumer increase utility without increasing expenditure and if so how?
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