### Problems and Applications Q1#### STEP: 1 of 2**1. Effect on Budget Constraint****2. Effect on Optimum**Maya divides her income between coffee and croissants (both of which are normal goods). Exceptionally good weather conditions in Brazil cause a large decrease in the price of coffee in the United States.**Question:**On the following graph, show the effect of the good weather conditions on Maya’s budget constraint (BC).#### Graph Explanation:In the provided graph, there are two axes:- The vertical axis represents the quantity of **Coffee**.- The horizontal axis represents the quantity of **Croissants**.There is a budget constraint line labeled **BC** that shows the maximum combination of coffee and croissants that Maya can afford given her budget. Due to the good weather conditions in Brazil, the price of coffee decreases.- **Budget Constraint Line (BC)**: The new budget constraint should pivot outward, indicating that with the same budget, Maya can now afford more coffee due to the decrease in its price, while the quantity of croissants she can afford remains unchanged.The graph effectively illustrates the concept of budget constraints and how a change in the price of one good affects the consumer's purchasing possibilities. The **pivot** shows an increase in the quantity of coffee for the same budget, signifying the impact of the price reduction.![Graph](https://via.placeholder.com/300x200.png)

A budget constraint is a concept in economics that describe the limitations or restrictions on the…

Maya divides her income between coffee and croissants (both of which are normal goods). Exceptionally good weather conditions in Brazil cause a large decrease in the price of coffee in the United States.

Maya divides her income between coffee and croissants (both of which are normal goods). Exceptionally good weather conditions in Brazil cause a large decrease in the price of coffee in the United States.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Assume that pickled eggs are an inferior good and its market is currently in equilibrium. What will happen to the equilibrium price and quantity of pickled eggs if consumer incomes increase? Group of answer choices
A decrease in both the equilibrium price and the equilibrium quantity of pasta is best explained by an: increase in the expected future price of pasta. increase in the cost of producing pasta. decrease in income if pasta is an inferior good. decrease in the price of rice if pasta and rice are substitutes.
Consider two markets: the market for cat food and the market for dog food. The initial equilibrium for both markets is the same, the equilibrium price is $4.50, and the equilibrium quantity is 31.0. When the price is $8.75, the quantity supplied of cat food is 75.0 and the quantity supplied of dog food is 105.0. For simplicity of analysis, the demand for both goods is the same. Using the midpoint formula, calculate the elasticity of supply for dog food. Please round to two decimal places.
A steeper demand curve is considered to be relatively more [Select] than a flatter demand curve, because for any given change in price, the change in quantity for the steeper curve is [Select] than for the flatter curve.
Consider two markets: the market for coffee and the market for hot cocoa. The initial equilibrium for both markets is the same, the equilibrium price is $5.50, and the equilibrium quantity is 37.0. When the price is $8.75, the quantity supplied of coffee is 69.0 and the quantity supplied of hot cocoa is 101.0101.0. For simplicity of analysis, the demand for both goods is the same. Using the midpoint formula, calculate the elasticity of supply for hot cocoa. Please round to two decimal places.
Sales of bananas have dropped from 100,000 pounds to 75,000 pounds per day because a freeze resulted in a smaller supply. In the process, the average price of a pound of bananas has risen from $0.80 to $1.00. Which of the following is most likely true? The demand for bananas has increased because of the increase in price.The demand for ice cream (used in banana splits) is likely to decrease.The price of tapes will rise about 25 percent.The total revenue (P times Q) from sales has risen.The quantity demanded of ice cream will increase. Flag this Question
You love peanut butter. Other spreads are just not as good, as far as you're concerned. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your demand for peanut butter Group of answer choices will increase but not until the end of the year. increases today. decreases as you look for a substitute good. shifts left today.
This question provides another chance to practice implementing the 4-step approach to analyzing shifts in supply and demand. With the onset of the coronavirus pandemic, many people became fearful of going to restaurants for full-service, sit-down meals. C) As the demand decreased, the supply turned into a surplus. As the demand for restaurant meals has decreased, there is an excess of restaurant meals. D) Based on your answer to part c., will the equilibrium quantity of restaurant meals go up or will the equilibrium quantity of restaurant meals go down? Explain your answer. In particular, will your answer focus on quantity demanded or will it focus on the quantity supplied? E) Result: state the effects of the fear of eating in restaurants on the equilibrium price and quantity of restaurant meals
Inferior goods are affordable substitutes for more expensive goods. Which of the following is an example of someone purchasing an inferior good? Tom saved his money for an entire year so that he could buy the nicest car on the lot. Susan decided to buy her favorite pasta, rather than the store-brand pasta that she usually purchases. Sam had to stay within his budget, so he decided to buy generic toaster pastries instead of his favorite brand-name pastries. Jennifer earned a bonus at work, so she decided to go out to dinner at a fancy restaurant.
Lorena likes to play golf. The number of times per year that she plays depends on both the price of playing a round of golf as well as Lorena’s income and the cost of other types of entertainment—in particular, how much it costs to go see a movie instead of playing golf. The three demand schedules in the table below show how many rounds of golf per year Lorena will demand at each price under three different scenarios. In scenario D1, Lorena’s income is $50,000 per year and movies cost $9 each. In scenario D2, Lorena’s income is also $50,000 per year, but the price of seeing a movie rises to $11. And in scenario D3, Lorena’s income goes up to $70,000 per year, while movies cost $11. a. Using the data under D1 and D2, calculate the cross-elasticity of Lorena’s demand for golf at all three prices. (To do this, apply the midpoints approach to the cross-elasticity of demand.) Is the cross-elasticity the same at all three prices? Are movies and golf substitute goods, complementary goods, or…
During the COVID 19 pandemic, the demand for personal protective equipment increased. What adjustments would the market make as a result that would benefit the economy? Group of answer choices The price of personal protective equipment would fall because producers could not meet the demand at lower prices. The price of personal protective equipment would rise, signaling to producers that more production was needed. The price of personal protective equipment would rise, signaling to consumers that they should purchase less personal protective equipment. The supply of personal protective equipment fell as production became more expensive.
Consider two markets: the market for cat food and the market for dog food. The initial equilibrium for both markets is the same, the equilibrium price is $⁢3.50, and the equilibrium quantity is 31.0. When the price is $10.75, the quantity supplied of cat food is 75.0 and the quantity supplied of dog food is 103.0. For simplicity of analysis, the demand for both goods is the same. Using the midpoint formula, calculate the elasticity of supply for dog food. Please round to two decimal places.