(a) Draw the feasible (budget) set of the consumer who buys this bundle ticket and the budget set of the consumer who doesn't buy this bundle ticket, on the same graph, with all relevant intercepts, slopes, intersections and other points. (b) Calculate the optimal bundle for the consumer. Does she buy the bundle ticket or not? (c) If the bundle ticket for $2100 gave permission for x rides in general (rather than 1000), what should x at least be, so that she would prefer buying the bundle ticket (to not buying)?
(a) Draw the feasible (budget) set of the consumer who buys this bundle ticket and the budget set of the consumer who doesn't buy this bundle ticket, on the same graph, with all relevant intercepts, slopes, intersections and other points. (b) Calculate the optimal bundle for the consumer. Does she buy the bundle ticket or not? (c) If the bundle ticket for $2100 gave permission for x rides in general (rather than 1000), what should x at least be, so that she would prefer buying the bundle ticket (to not buying)?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![PROBLEM (3) A consumer visiting an amusement park has a budget of $3600 and preferences u(x, y) = xy² over
rides (x) and the composite good (y), with prices px= 3 and px= 1. In addition to the "single ride" tickets for px= 3, the
park also sells a promotional "bundle ticket" of 1000 rides for $2100 (you cannot buy multiple of these bundle tickets;
but just one).
(a) Draw the feasible (budget) set of the consumer who buys this bundle ticket and the budget set of the consumer who
doesn't buy this bundle ticket, on the same graph, with all relevant intercepts, slopes, intersections and other points.
(b) Calculate the optimal bundle for the consumer. Does she buy the bundle ticket or not?
(c) If the bundle ticket for $2100 gave permission for x rides in general (rather than 1000), what should x at least be, so
that she would prefer buying the bundle ticket (to not buying)?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0a08d33b-c2db-42c2-aef3-0a33cdc53ac0%2Fac0578cf-16ee-49f7-8fe5-30f5e4a440d4%2Fa50ijjp_processed.png&w=3840&q=75)
Transcribed Image Text:PROBLEM (3) A consumer visiting an amusement park has a budget of $3600 and preferences u(x, y) = xy² over
rides (x) and the composite good (y), with prices px= 3 and px= 1. In addition to the "single ride" tickets for px= 3, the
park also sells a promotional "bundle ticket" of 1000 rides for $2100 (you cannot buy multiple of these bundle tickets;
but just one).
(a) Draw the feasible (budget) set of the consumer who buys this bundle ticket and the budget set of the consumer who
doesn't buy this bundle ticket, on the same graph, with all relevant intercepts, slopes, intersections and other points.
(b) Calculate the optimal bundle for the consumer. Does she buy the bundle ticket or not?
(c) If the bundle ticket for $2100 gave permission for x rides in general (rather than 1000), what should x at least be, so
that she would prefer buying the bundle ticket (to not buying)?
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps with 1 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
![Managerial Economics & Business Strategy (Mcgraw-…](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education