Jake enjoys eating peanut butter sandwiches and drinking soda. He is particular about proportions, though: For every peanut butter sandwich he eats, he must drink exactly one glass of sods, and vice versa. Jake can purchase the peanut butter for his sandwiches in two jar sizes: 20 ounces and 40 ounces. Jake cares only about the total amount of peanut butter he has available and not at all about the jar size. In other words, he's just as happy with two 20-ounce jars as he is with one 40-ounce jar. In this scenario, peanut butter sandwiches and glasses of soda are Two possible bundles of peanut butter sandwiches and glasses of sods are shown on the following graph, labeled A and B.

Jake enjoys eating peanut butter sandwiches and drinking soda. He is particular about proportions, though: For every peanut butter sandwich he eats, he must drink exactly one glass of sods, and vice versa. Jake can purchase the peanut butter for his sandwiches in two jar sizes: 20 ounces and 40 ounces. Jake cares only about the total amount of peanut butter he has available and not at all about the jar size. In other words, he's just as happy with two 20-ounce jars as he is with one 40-ounce jar. In this scenario, peanut butter sandwiches and glasses of soda are Two possible bundles of peanut butter sandwiches and glasses of sods are shown on the following graph, labeled A and B.

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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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.
4. Assume that the following graph show the indifference curve and budget line for a consumer who is choosing between "all other items" and "hand sanitizer". All other items A Hand sanitizer We know that the preferences and demand for hand sanitizer increased dramatically starting in mid-March 2020 due to the coronavirus pandemic. How would you show a change in preferences for hand sanitizer on the graph given above? Would the budget line change, or would the position of the indifference curve change? You may assume that income and prices of all other items and hand sanitizers did not change. Please give an explanation and show the changes on the graph.
1. Calculate the marginal utility per dollar for sodas.
5. Vera is an impoverished graduate student who has only $100 a month to spend on food. She has read in a government publication that she can assure an adequate diet by eating only peanut butter and carrots in the Öxed ratio of 2 pounds of peanut butter to 1 pound of carrots, so she decides to limit her diet to that regime. a) If peanut butter costs $4 per pound and carrots cost $2 per pound, how much can she eat during the month? b) Suppose peanut butter costs rise to $5 because of peanut subsidied introduced by a politically sensitive government. By how much will Vera have to reduce her food purchases? c) How much in food stamp aid would the government have to give Vera to compensate for the e§ects of peanut subsidy? d) Explain why Veraís preferences are of a very special type here. How would you graph them?
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