PLEASE ANSWER FULLY AND SHOW GRAPHS: Suppose George consumes only two goods: Pepsi and pizza. The price of a pizza pie is $10 and a twelve - pack of Pepsi costs $4. George's total weekly income is $360. a) Draw George's budget line. b) Show what happens to his budget line when the price of pizza decreases by 20%. c) Show what happens to George's budget line if he gets a raise and his income increases to $400 ( assume (b) never happened). d) Pizza Hut is having a special deal called "buy nine, get one for free." If you buy 9 pizzas, you get an extra for free. You don't have to buy 9 pizzas all at the same time. You can take a card from Pizza Hut and ask them to punch a hole every time you buy a pizza; a card with 9 holes is worth a pizza. Show George's new budget line (assume (b) and (c) never happened). e) The government is concerned that Americans aren't eating enough pizza. A new study says that eating a minimum of 8 pizzas a week is good for health. In order to encourage this healthy minimum pizza consumption, the government decides to give a subsidy of $5 a pizza for pizzas consumed up to the minimum required for a healthy diet, after which consumers must pay the original market price. To finance this program, the government imposes a $40 income tax on each person. Show George's new budget line (assume (b) - (d) never happened).
PLEASE ANSWER FULLY AND SHOW GRAPHS: Suppose George consumes only two goods: Pepsi and pizza. The price of a pizza pie is $10 and a twelve - pack of Pepsi costs $4. George's total weekly income is $360. a) Draw George's budget line. b) Show what happens to his budget line when the price of pizza decreases by 20%. c) Show what happens to George's budget line if he gets a raise and his income increases to $400 ( assume (b) never happened). d) Pizza Hut is having a special deal called "buy nine, get one for free." If you buy 9 pizzas, you get an extra for free. You don't have to buy 9 pizzas all at the same time. You can take a card from Pizza Hut and ask them to punch a hole every time you buy a pizza; a card with 9 holes is worth a pizza. Show George's new budget line (assume (b) and (c) never happened). e) The government is concerned that Americans aren't eating enough pizza. A new study says that eating a minimum of 8 pizzas a week is good for health. In order to encourage this healthy minimum pizza consumption, the government decides to give a subsidy of $5 a pizza for pizzas consumed up to the minimum required for a healthy diet, after which consumers must pay the original market price. To finance this program, the government imposes a $40 income tax on each person. Show George's new budget line (assume (b) - (d) never happened).
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:PLEASE ANSWER FULLY AND SHOW GRAPHS: Suppose
George consumes only two goods: Pepsi and pizza. The
price of a pizza pie is $10 and a twelve - pack of Pepsi
costs $4. George's total weekly income is $360. a)
Draw George's budget line. b) Show what happens to
his budget line when the price of pizza decreases by
20%. c) Show what happens to George's budget line if
he gets a raise and his income increases to $400 (
assume (b) never happened). d) Pizza Hut is having a
special deal called "buy nine, get one for free." If you
buy 9 pizzas, you get an extra for free. You don't have to
buy 9 pizzas all at the same time. You can take a card
from Pizza Hut and ask them to punch a hole every time
you buy a pizza; a card with 9 holes is worth a pizza.
Show George's new budget line (assume (b) and (c)
never happened). e) The government is concerned
that Americans aren't eating enough pizza. A new study
says that eating a minimum of 8 pizzas a week is good
for health. In order to encourage this healthy minimum
pizza consumption, the government decides to give a
subsidy of $5 a pizza for pizzas consumed up to the
minimum required for a healthy diet, after which
consumers must pay the original market price. To
finance this program, the government imposes a $40
income tax on each person. Show George's new budget
line (assume (b) - (d) never happened).
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