A college student has two options for meals: eating at the dining hall for $6 per meal, or eating a cup of Ramen soup for $1.50 per meal. their weeklyfood budget is $60.Assume that they spend equal amounts on both goods.On the following graph, use the green line (triangle symbol) to draw the college student's budget constraint. Then use the black point (plus symbol) toindicate the initial optimum in this case.5045ss Tips40s TipsUTCups of Ramen Soup288331050o246 8 10 12 141618 20Meals at Dining HallAInitial Budget ConstraintInitial Optimum (A)New Budget ConstraintNew Optimum (B)?13

The budget line demonstrates the available budget of the college student. It illustrates the maximum…

Answered: A college student has two options for…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Chapter 22 Homework Poornima likes going to the ballpark to watch baseball, and she also is fond of going to the theater to listen to the symphony orchestra. The following diagram shows two of Poornima's indifference curves for going to ballgames and symphonies. With Poornima's initial budget constraint (BC B₁), she chose to go to two symphonies and six baseball games per month (point x). Then her budget constraint shifted to BC, and she chose to go to five symphonies and five ballgames per month (point Y). SYMPHONIES Of the following choices, which could have shifted to Poornima's budget constraint from BC₁ BC₂ ? Check all that apply. The prices 2 both baseball and symphony tickets decreased while her income stayed the same. Her income decreased while the prices of baseball and symphony tickets stayed the same. The price of symphony tickets increased while her income and the price of baseball tickets stayed the same. Her income increased while the prices of baseball and symphony…
Consider a consumer's annual budget constraint for two goods: "everything else" and "tools". When answering the following questions, please be sure to label your graph accordingly. Draw the budget constraint for this consumer if income (v) = $60,000 and the price per tool (p;) is $20. Note: please graph tools along the x-axis. How would this consumer's budget constraint change in she received an additional $1,000 in income? Returning to the original conditions, how would this consumcr's budget line change if she received a $1,000, non-refundable and non-transferable, gift card from Home Depot? Assume Home Depot only sells tools. to that from the previous question? How does this budget line compare Note: The $1,000 gift card can only be spent on tools.
In Workout problem 5.1, Charlie has a utility function U(xA, xB) = xAxB, the price of apples is $1, and the price of bananas is $2. If Charlie's income were $160, how many units of bananas would he consume if he chose the bundle that maximized his utility subject to his budget constraint?
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).
Graham brings $20 to his local college hockey game in order to purchase cheeseburgers and seltzer. The following diagram presents his budget constraint: CANS OF SELTZER 10 6 B 5 4 3 r 0 1 2 BC 4 5 6 CHEESEBURGERS 7 According to the diagram, cheeseburgers cost $ 8 9 10 BC each, and seltzer costs $ (?) per can. Adjust the diagram to show how Graham's budget constraint would change if the price of seltzer decreased. (Assume the price of cheeseburgers and Graham's income remain the same.) Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther.
PROBLEM (4) You have the Cobb-Douglas utility function u(x, y) = xy over apples (x) and plums (y) and you have $120 budget to spend and can carry at most 480 ounces in weight in your backpack going back to the dorm. Each apple costs $1 and weighs 8 ounces, and each plum costs $3 and weighs 4 ounces. You can only leave the store with a bundle of fruits you can afford and carry. (a) Drawing the relevant lines, intercepts, marking the points and hence identifying the feasible set of bundles, calculate the optimal bundle. (b) Forget about (a). If you were to choose a backpack before going on this shopping trip, for the weight constraint not to be an issue for you, how many ounces of weight capacity would you need for your backpack? HINT: That is, for this weight capacity of the backpack, you'd be able to carry the best bundle you can afford, i.e, the weight constraint is not binding for your decision. (c) Forget about (b). In (a), just before going out for shopping with your backpack to…
Pam has a monthly budget of £120 to be spent on T-shirts and trainers. She could afford to buy two T-shirts and two pairs of trainers. She could also buy eight T-shirts. In each case, she would be spending her entire monthly allowance. Calculate the price of a T-shirt and the price of a pair of trainers. Write down Pam’s budget equation and draw the corresponding budget line. Mark the two consumption bundles mentioned above. In your graph, clearly label the axes, the budget line, and calculate the coordinates of the points of intersection of the budget line with each axis. Interpret each of those points. Discuss how Pam’s budget set would change if the price of a T-shirt doubles. Show the relevant changes graphically. How should Pam’s income change so that she could still afford to buy two T-shirts and two pairs of trainers? Discuss how Pam’s budget constraint would change if the government imposed a tax of £3 per each pair of trainers.
Lucas has $40 per week that he can spend on lemon soda (X) and chips (Y). The price of the lemon soda (PX) is $2 per bottle, and the price of the chips (PY) is $4 price Write down Lucas’s budget constraint. Draw the budget constraint on the graph below. Make sure to indicate the intercepts and the slope of budget constraint. Label it as BC1. Provide an economic interpretation of the slope of the budget constraint BC1 Suppose Lucas’s income decreases to $12 per week, and the price of lemon soda and chips remain the same. Write down Lucas’s new budget constraint. Then draw his new budget constraint on the same graph above. Make sure to indicate the intercepts and the slope. Label it as BC2. Suppose Lucas’s income remains to be $40 per week and the price of chips remains the same, but the price of lemon soda (PX) increases to $5. Write down Lucas’s new budget constraint. Then draw his new budget constraint on the same graph above. Make sure to indicate the intercepts and the…
Another instance when people are likely not to spend a dime (or a minute) on an item is when they have a dislike for mixing the item with other items available. In this case, we say the consumer has ‘non-convex preferences’ and indifference curves are bowed out from the origin. In plain language, the consumer has a preference for binging. We often feel this way towards our favorite social media app. Consider a kid who has four hours a day to spend on social media. They enjoy spending time on Snapchat (x) or spending time on Twitter (y). a) Write the kid’s time constraint and illustrate it in a graph where you measure time spent on Snapchat along the horizontal axis and time spent on Twitter along the vertical axis. This kid’s utility from time spent on Snapchat and time spent on Twitter is U(x,y) = 4x2+ y2. b) In your graph, draw a couple of the kid’s indifference curves. Notice how the kid’s |MRSY,X| increases along each curve as he spends more time on Snapchat and less time on…
Suppose you had a budget of $20.00 and the prices of a burger and a slice of pizza are $5.00 and $2.00 respectively. What would be your optimal consumption bundle?
Suppose Lorenzo has a weekly budget of $48 to spend on ranch dressing and peanut butter. Ranch dressing is priced at $4 per bottle, and peanut butter is priced at $6 per jar. If Lorenzo spends his entire $48 on ranch dressing, he can buy jars of peanut butter. buy Use the blue line (circle symbol) to plot Lorenzo's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the area that represents combinations of ranch dressing and peanut butter that are affordable for Lorenzo. Finally, place the black point (plus symbol) on the point on Lorenzo's budget constraint that corresponds to a scenario in which Lorenzo spends $24 on each good. Note: Dashed drop lines will automatically extend to both axes. PEANUT BUTTER (Jars) 24 22 20 18 2 0 + 0 2 4 12 14 16 18 20 22 bottles of ranch dressing. If he spends his entire $48 on peanut butter, he can 6 8 RANCH DRESSING (Bottles) O True False BC, ($48) O Affordable Region $24 on Each What does the slope of…
Tony is throwing a party at his Fraternity and is trying to choose what booze to buy. A bottle of vodka has three times the alcohol as a six-pack of beer. Assume that Tony only cares about the total amount of alcohol in his basket. (use vodka on the X-axis and beer measured in six-pack on the Y-axis) a) Devise a utility function to represent these preferences. b) Suppose a bottle of vodka costs $40, a six-pack of beer costs $10, and the budget is $200. Write the budget constraint. c) Solve Tony’s utility maximization problem and find the optimal combination. d) Suppose that a bottle of vodka cost has increased to $50. What will be his new optimal combination.

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