Q. 1 Suppose Gregg consumes chocolate candy bars and oranges. He is given fourcandy bars and three oranges. He can buy or sell a candy bar for $2 each. Similarly,he can buy or sell an orange for $1. If he has no other source of income, draw hisbudget constraint and write the equation. What is the most he can spend, Y, on thesegoods?Answer:(3)Q. 2 Suppose that Boston consumers pay twice as much for avocados as fortangerines, whereas San Diego consumers pay half as much for avocados as fortangerines. Assuming that consumers maximize their utility, which city's consumershave a higher marginal rate of substitution of avocados for tangerines? Explain youranswer.(3+3)II. Bessie, who can currently work as many hours as she wants at a wage of w,chooses to work ten hours a day. Her boss decides to limit the number of hours thatshe can work to eight hours per day. Show how her budget constraint and choice ofhours change. Is she unambiguously worse off as a result of this change? Why?

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Q. 1 Suppose Gregg consumes chocolate candy bars and oranges. He is given four candy bars and three oranges. He can buy or sell a candy bar for $2 each. Similarly, he can buy or sell an orange for $1. If he has no other source of income, draw his budget constraint and write the equation. What is the most he can spend, Y, on these goods? (3)

Q. 1 Suppose Gregg consumes chocolate candy bars and oranges. He is given four candy bars and three oranges. He can buy or sell a candy bar for $2 each. Similarly, he can buy or sell an orange for $1. If he has no other source of income, draw his budget constraint and write the equation. What is the most he can spend, Y, on these goods? (3)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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