Question 5

Economics Today and Tomorrow, Student Edition
1st Edition
ISBN:9780078747663
Author:McGraw-Hill
Publisher:McGraw-Hill
Chapter7: Demand And Supply
Section7.3: The Law Of Supply And The Supply Curve
Problem 4R
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* Would you expect marginal utility to rise or fall with additional consumption
of a good? Why?

* Tarik consumes bread and sausages. He has decided that his monthly budget
will be $1400. Suppose that one bread costs $35, while one sausage costs $40.
i. What is the expression for Tarik’s budget constraint? 
ii. Draw a graph of Tarik’s budget line (bread on the y axis). 
iii. Show how Tarik’s budget line changes if the price of sausages increases
to $55. 
iv. Suppose Tarik decides to cut his monthly budget in half. Coincidentally,
the next time he shops, he learns that bread and sausages are on sale for
quarter of the price. Show what happens to Tarik’s budget line? 

Question 5
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