6.5 (0) Shirley Sixpack, as you will recall, thinks that two 8-ounce c of beer are exactly as good as one 16-ounce can of beer. Suppose t these are the only sizes of beer available to her and that she has $30 spend on beer. Suppose that an 8-ounce beer costs $.75 and a 16-ou beer costs $1. On the graph below, draw Shirley's budget line in blue i and draw some of her indifference curves in red. 8-ounce cans 40 30 20 10 20 16-ounce cans 10 30 40 (a) At these prices, which size can will she buy, or will she buy some of each?, (6) Suppose that the price of 16-ounce beers remains $1 and the price of S-ounce beers falls to 8.55. Will she buy more 8-ounce beers?. (c) What if the price of 8-ounce beers falls to 8.40? How many 8-ounce beers will she buy then?- (d) If the price of 16-ounce beers is $1 each and if Shirley chooses some S-ounce beers and some 16-ounce beers, what must be the price of 8-ounce beers? (e) Now let us try to describe Shirley's demand function for 16-ounce beers as a function of general prices and income. Let the prices of 8-ounce and 16-ounce beers be ps and Pie, and let her income be m. If Pie < 2Ps, then the mumber of 16-ounce beers she will demand is- Il Ps > 2Ps then the mumber of 16-ounce beers she will demand is . If Pe= -Ps, she will be indifferent between any affordable combinations.
6.5 (0) Shirley Sixpack, as you will recall, thinks that two 8-ounce c of beer are exactly as good as one 16-ounce can of beer. Suppose t these are the only sizes of beer available to her and that she has $30 spend on beer. Suppose that an 8-ounce beer costs $.75 and a 16-ou beer costs $1. On the graph below, draw Shirley's budget line in blue i and draw some of her indifference curves in red. 8-ounce cans 40 30 20 10 20 16-ounce cans 10 30 40 (a) At these prices, which size can will she buy, or will she buy some of each?, (6) Suppose that the price of 16-ounce beers remains $1 and the price of S-ounce beers falls to 8.55. Will she buy more 8-ounce beers?. (c) What if the price of 8-ounce beers falls to 8.40? How many 8-ounce beers will she buy then?- (d) If the price of 16-ounce beers is $1 each and if Shirley chooses some S-ounce beers and some 16-ounce beers, what must be the price of 8-ounce beers? (e) Now let us try to describe Shirley's demand function for 16-ounce beers as a function of general prices and income. Let the prices of 8-ounce and 16-ounce beers be ps and Pie, and let her income be m. If Pie < 2Ps, then the mumber of 16-ounce beers she will demand is- Il Ps > 2Ps then the mumber of 16-ounce beers she will demand is . If Pe= -Ps, she will be indifferent between any affordable combinations.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:6.5 (0) Shirley Sixpack, as you will recall, thinks that two 8-ounce ca
of beer are exactly as good as one 16-ounce can of beer. Suppose th
these are the only sizes of beer available to her and that she has $30
spend on beer. Suppose that an 8-ounce beer costs $.75 and a 16-our
beer costs $1. On the graph below, draw Shirley's budget line in blue in
and draw some of her indifference curves in red.
8-ounce cans
40
30
20
10
10
20
30
40
16-ounce cans
(a) At these prices, which size can will she buy, or will she buy some of
each?
(b) Suppose that the price of 16-ounce beers remains $1 and the price of
8-ounce beers falls to 8.55. Will she buy more 8-ounce beers?-
(c) What if the price of 8-ounce beers falls to $.40? How many 8-ounce
beers will she buy then?.
(d) If the price of 16-ounce beers is s1 each and if Shirley chooses some
8-ounce beers and some 16-ounce beers, what must be the price of 8-ounce
beers?.
(e) Now let us try to describe Shirley's demand function for 16-ounce beers
as a function of general prices and income. Let the prices of 8-ounce and
16-ounce beers be ps and pis: and let her income be m. If p16 < 2ps, then
the mumber of 16-ounce beers she will demand is.
If Pie > 2Ps.
then the number of 16-ounce beers she will demand is
If Pie =
ps, she will be indifferent between any affordable combinations.
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