c) Suppose you only buy two goods, food (x) and clothing (y), and the government offers you 50 coupons for free food. Each coupon allows you to redeem it at any food store for one unit (such as kilogram) of food. The price of food, Px, is $5 per unit and the price of clothing, Py, is $10 per unit. The government prints your name on the coupon and it requires the store to check your photo ID to ensure your identity. Income is $400. d) Continue with part c): Suppose the government wants to cut administrative costs and would no longer print names on the 50 coupons it gives you. You can sell none, some or all of the coupons in the black market for $3 each. You get cash from selling these coupons. Clothing (4) Clothing (y) 20 20 Go 10 d 1 60 + X 80 100 food (x) food (x) 3

c) Suppose you only buy two goods, food (x) and clothing (y), and the government offers you 50 coupons for free food. Each coupon allows you to redeem it at any food store for one unit (such as kilogram) of food. The price of food, Px, is $5 per unit and the price of clothing, Py, is $10 per unit. The government prints your name on the coupon and it requires the store to check your photo ID to ensure your identity. Income is $400. d) Continue with part c): Suppose the government wants to cut administrative costs and would no longer print names on the 50 coupons it gives you. You can sell none, some or all of the coupons in the black market for $3 each. You get cash from selling these coupons. Clothing (4) Clothing (y) 20 20 Go 10 d 1 60 + X 80 100 food (x) food (x) 3

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter6: Consumer Choices

Section: Chapter Questions

Problem 1SCQ: Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can...

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how does each consumers indivual consumer surplus change
Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either call her on the land-line phone for five cents per minute or he can drive to see her, at a roundâ€”trip cost of 2 in gasoline money. He has a total of 10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses a handy utilimometer that measures his total utility from personal visits and from phone minutes. Using the values in Table 6.6, figure out the points 011 Jeremys consumption choice budget constraint (it may be helpful to do a sketch) and identify his utility-maximizing point.
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TU TU of MU Qfood food MU food MU/p Drink drinks drinks MU/p 0 0 1 30 2 55 3 75 956 90 100 012345 0 30 57 7 105 106 67 78 93 102 108 111 The marginal utility for consuming the 3rd unit of food is utility for consuming the 5th unit of drinks is ? and the margina 20; 9 75; 102 15;8 There is not enough information to tell O What am I doing in this class? Why don t I know the answer to these? (This is an incorrect answer)
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