Brenda wants to buy a new car and has a budget of $24,000. She has just found a magazine that assigns each car an index for styling and an index for gas mileage. Each index runs from 0 to 12, with 12 representing either the most styling or the best gas mileage. While looking at the list of cars, Brenda observes that on average, as the style index increases by one unit, the price of the car increases by $2,000. She also observes that as the gas-mileage index rises by one unit, the price of the car increases by $4,000. (a) Illustrate (for yourself) the various combinations of gas mileage (G) and style (S) that Brenda could select with her $24,000 budget. Place gas mileage on the horizontal axis. • Her budget line is given by 4,000*G +| [ Select ] *S= [ Select ] • The X-intercept of her budget line is equal to [ Select ] • The Y-intercept of her budget line is equal to [ Select ]

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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(b) Brenda likes both styling and mileage equally and wants to have a car with
the same index for styling as for gas mileage. How do her indifference curves
look like? What type of car will Brenda choose?
Brenda's indifference curves are
downward sloping straight lin
Brenda will choose a car with G = [Select ]
units of
%3D
mileage and S = [ Select ]
units of styling.
(c) Ryan also wants to spend $24,000 to buy a new car, but he does not care at
all about styling and wants the best gas mileage possible. How do his
indifference curves look like? What type of car will Ryan choose?
• Ryan's indifference curves are
[ Select ]
Ryan will choose a car with G
[ Select ]
units of
%3D
mileage and S =
[ Select ]
units of styling.
Transcribed Image Text:(b) Brenda likes both styling and mileage equally and wants to have a car with the same index for styling as for gas mileage. How do her indifference curves look like? What type of car will Brenda choose? Brenda's indifference curves are downward sloping straight lin Brenda will choose a car with G = [Select ] units of %3D mileage and S = [ Select ] units of styling. (c) Ryan also wants to spend $24,000 to buy a new car, but he does not care at all about styling and wants the best gas mileage possible. How do his indifference curves look like? What type of car will Ryan choose? • Ryan's indifference curves are [ Select ] Ryan will choose a car with G [ Select ] units of %3D mileage and S = [ Select ] units of styling.
Brenda wants to buy a new car and has a budget of $24,000. She has just
found a magazine that assigns each car an index for styling and an index for gas
mileage. Each index runs from 0 to 12, with 12 representing either the most
styling or the best gas mileage. While looking at the list of cars, Brenda
observes that on average, as the style index increases by one unit, the price of
the car increases by $2,000. She also observes that as the gas-mileage index
rises by one unit, the price of the car increases by $4,000.
(a) Illustrate (for yourself) the various combinations of gas mileage (G) and style
(S) that Brenda could select with her $24,000 budget. Place gas mileage on the
horizontal axis.
• Her budget line is given by 4,000*G +
[ Select ]
*S=
[ Select ]
• The X-intercept of her budget line is equal to
[ Select ]
• The Y-intercept of her budget line is equal to
[ Select ]
Transcribed Image Text:Brenda wants to buy a new car and has a budget of $24,000. She has just found a magazine that assigns each car an index for styling and an index for gas mileage. Each index runs from 0 to 12, with 12 representing either the most styling or the best gas mileage. While looking at the list of cars, Brenda observes that on average, as the style index increases by one unit, the price of the car increases by $2,000. She also observes that as the gas-mileage index rises by one unit, the price of the car increases by $4,000. (a) Illustrate (for yourself) the various combinations of gas mileage (G) and style (S) that Brenda could select with her $24,000 budget. Place gas mileage on the horizontal axis. • Her budget line is given by 4,000*G + [ Select ] *S= [ Select ] • The X-intercept of her budget line is equal to [ Select ] • The Y-intercept of her budget line is equal to [ Select ]
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