Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
* 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?
Transcribed Image Text:Question 5
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