Emily goes camping on the weekend and eats marshmallows (M) and crackers (C) there. She wants to match 1 marshmallow with 2 crackers, but does not eat in different proportion (i.e., perfect com- plements). The price of a marshmallow is 10 cents and the price of a cracker is 5 cents, and she spend up to $3 in total. a) Write down a utility function which represents Emily's preferences over marshmallows and crackers. b) How many marshmallows and crackers is she going to consume? (Hint: the first-order conditions will not help; draw the budget constraint and the indifference curves and look at the highest one that intersect the budget constraint). c) What is the exact value of Emily's indirect utility?

Emily goes camping on the weekend and eats marshmallows (M) and crackers (C) there. She wants to match 1 marshmallow with 2 crackers, but does not eat in different proportion (i.e., perfect com- plements). The price of a marshmallow is 10 cents and the price of a cracker is 5 cents, and she spend up to $3 in total. a) Write down a utility function which represents Emily's preferences over marshmallows and crackers. b) How many marshmallows and crackers is she going to consume? (Hint: the first-order conditions will not help; draw the budget constraint and the indifference curves and look at the highest one that intersect the budget constraint). c) What is the exact value of Emily's indirect utility?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Given above are some of the indifference curves for a student who consumes Burritos and Pizzas and…

A: Since you have posted a question with multiple sub parts, we will provide the solution only to the…

Q: It is known that the indifference curve is convex. What does this tell you about the relationship…

A: The indifference curve refers to the graphical representation of different combinations of two goods…

Q: Why does the optimal consumption bundle occur where the budget line is tangent to the indifference…

A: Answer: Introduction: A consumer maximizes his/her consumption where the slope of the budget line is…

Q: if there are 2 products, milk and yoghurt, how can we understand the satisfaction maximization…

A: In the context of consumer choice and satisfaction maximization, a budget line represents all…

Q: Suppose that you have an income of $20 to spend on sticky hands and gumballs. Both cost $1.00.…

A: Answer: The new budget constraint is given below: Let the sticky hands is shown on y-axis and…

Q: Create a diagram with axes representing the quantities of XA and XB. Plot the original and new…

A: Substitution effect measures the change in the quantity of the commodity when the price of the…

Q: Sally loves to drink her coffee with two teaspoons of sugar. The unit price of coffee is $3 and the…

A: The budget line shows the different combinations of two goods that a consumer can consume given the…

Q: marginal utility of hamburgers. On a graph with pizza on the x-axis and hamburgers on the y-axis,…

A: Budget constraint is the constraint which defines combination of two goods which a consumer can buy…

Q: draw a graph of indifference curves and budget line. including explain the meaning of the marginal…

A: The MRS of X for Y is defined as the amount of Y which can be given up by the consumer to gain an…

Q: The diagram below shows one of Popeye's indifference curves (relating bottles of pure olive oil to…

A: Utility is the satisfaction derived from the consumption of goods. Marginal utility is the utility…

Q: Explain the consumer’s Preferences and the Indifference Curv

A: Economics: It is the study of the manner of organizing money, business and industry.

Q: Milo spends £27 on stamps (S) and maple candy (C). His preferences for these goods are given by the…

A: Given , Milo income = 27 Utility function : U = min { S , 3C } Price of Stamps = 1.1 Price of…

Q: Draw a budget constraint for two goods and set of indifference curves over the possible…

A: Budget constraint represents the combinations of goods that an individual could purchase with the…

Q: Mrs. Rochester earns $4500 a week and spends her entire income on computers and pastries, since…

A: In microeconomics, the marginal rate of substitution, also known as technical rate of substitution,…

Q: Susan buys bagels and falafels. The price of a falafels is £1 and the price of a bagels is £3. Susan…

A: Price of F=1Price of B=3M=12Budget constraintPF*F+PB*B=<M1*F+3*B=<12

Q: What are the three properties of indifference curves for two goods?

A: An indifference curve is a graph that displays possible pairings of two goods or commodities that,…

Q: What are indifference curves?

A: The utility is a want satisfying power of a commodity. Marginal utility is the additional utility…

Q: Why is the consumer’s MRS equal to the price ratio at the optimal consumption point? Give a…

A: Answer: A consumer maximizes his/her utility where the indifference curve is tangent to the budget…

Q: Which of the following would have an indifference curve drawn as a right angle? plastic containers…

A: Indifference curve is a graph which shows various combinations of two goods that give same level of…

Question

100%

I MUST DRAW THE BUDGET CONSTRAINT AND INDIFFERENCE CURVE

Emily goes camping on the weekend and eats marshmallows (M) and crackers (C) there. She wants
to match 1 marshmallow with 2 crackers, but does not eat in different proportion (i.e., perfect com-
plements). The price of a marshmallow is 10 cents and the price of a cracker is 5 cents, and she
spend up to $3 in total.
a) Write down a utility function which represents Emily's preferences over marshmallows and
crackers.
b) How many marshmallows and crackers is she going to consume? (Hint: the first-order conditions
will not help; draw the budget constraint and the indifference curves and look at the highest one
that intersect the budget constraint).
c) What is the exact value of Emily's indirect utility?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2 Part a

Step 3 Part c:

Step 4

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

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.

Similar questions

Given above are some of the indifference curves for a student who consumes Burritos and Pizzas and the relevant budget line. Equilibrium is defined as the maximum utility or satisfaction given the consumer’s budget. The consumer has more indifference curves above I3, below I1, and between I1 and I2 and between I2 and I3. Out of all the indifference curves the consumer has, only I1, I2, and I3 are shown. The given budget line touches I2 at the point where I2 touches the y-axis (Burritos axis). a) If the price of Pizzas decreased and the price of Burritos remained unchanged, would the quantity of Burritos consumed at equilibrium increase or decrease compared to the equilibrium point A in the graph given above? (b) If the price of Pizzas increased and the price of Burritos remained the same, would the consumer equilibrium point be different from point A or the same as point A in the graph given above?
The figure below illustrates 3 indifference curves and two budget lines for a student whose budget for online gaming is $10/week. The red line illustrates this student's original budget line. After thanksgiving prices change, the blue (dash-dot) line illustrates the student's new (post-price change) budget line. a) What were the original hourly prices of FortDay and PokemonStop? What are the new prices? b) What is the students optimal bundle at the original prices? How about at the new prices?
The nearby graph shows Beau's indifference curves and budget line for pizza and tacos. Beau will not spend his entire budget at point: Pizza O A B OD Indifference curves B D A E Budget constraint- C - U₂ U₁ U3 Tacos
Suppose your only source of income is work and that you are paid $20 per hour. This determines a budget constraint. You can buy free time at the expense of your income by working less. Likewise, you can get more income at the expense of your free time by working more. Suppose that you can choose how many hours you work. How do you decide exactly on which point of your budget constraint you will choose? Explain this by referring to your indifference curves.
Make a curve of the budget line curve with the Indifference curve, make a separation between the substitution effect and the income effect Continue to make the demand curve decrease