Recitation 1. Bart and Maggie are Pitt students who are allocating their budget for carrying bags plastic bags, which cost $0.25 each, and the Pitt ByoBags, which cost $6 each. They e a budget of $18 to cover the cost of carrying bags over the 15-week semester. a) What is the equation for Bart's budget line? Px+cy=1 0.25x+6y=18 b) What is the equation for Maggie's budget line? buda
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- 18. Jake and Gonzalo are roommates and have saved a total of $360 to spend on summer entertainment. They have decided to use this money on tickets to baseball games and on tickets to their local amusement park. Their original budget constraint is shown in the graph below. Let X represent amusement park tickets and Y represent baseball tickets. Baseball tickets (Y) 20 15 10 5 0 4 8 12 New budget constraint a. What is the equation of the original budget constraint? b. What is the price of an amusement park ticket? a baseball ticket? c. Assume a price change occurs and Jake and Gonzalo now face the new budget constraint. What is the equation of the new budget constraint? d. With the new budget constraint, what is the price of an amusement park ticket? a baseball ticket? Original budget constraint 16 20 Amusement park tickets (X)A student has a monthly budget of $120 to spend on either burrito, which cost $6 each, or sodas, which cost $4 each.Draw the student's budget constraint. Put burritos on the x-axis and sodas on the y-axis. Which combinations of burritos and sodas are unaffordable--those to the left of the line in the graph or those above the line in the graph? Why? Which combinations would leave some budget unspent - those to the left of the line in the above graph or those to the right of the line in the above graph?For Unit 4 Learning Journal, you will use the marginal utility formula to choose between two products. Catherine is having dinner at the Yellow Restaurant. She wants desert after eating her entree. She is trying to decide between a cookie or a slice of pie. The cost of a cookie is $5 and the cost of a slice of pie is $8. Refer to the Unit 4 Learning Journal Marginal Utility spreadsheet Compute the marginal utility for cookie and slice of pie Compute the marginal utility per dollar What is the utility maximizing choice for a cookie and slice of pie? Explain what the utility maximizing choice means. Discuss how you could use marginal utility to make consumer choices
- A student has a monthly budget of $120 to spend on either burritos, which cost $6 each, orsodas, which cost $4 each.What is the largest number of burritos that the student could afford to purchase in onemonth?What is the largest number of sodas the student could afford to purchase in one month? Draw the student's budget constraint. Put burritos on the x-axis and sodas on the y-axis.1. An individual's budget Suppose Darnell has a weekly budget of $32 to spend on ranch dressing and spinach. Ranch dressing is priced at $4 per bottle, and spinach is priced at $2 per container. If Darnell spends his entire $32 on ranch dressing, he can buy 16 containers of spinach. 8 bottles of ranch dressing. If he spends his entire $32 on spinach, he can buy Use the blue line (circle symbol) to plot Darnell's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the area that represents combinations of ranch dressing and spinach that are affordable for Darnell. Finally, place the black point (plus symbol) on the point on Darnell's budget constraint that corresponds to a scenario in which Darnell spends $16 on each good. Note: Dashed drop lines will automatically extend to both axes.The following table shows the marginal utility per dollar of apples and pears for five consumers: Consumer Marginal Utility Per Dollar Apples Pears Darnell 8 5 Eleanor 7 8 Jacques 6 6 Kyoko 5 4.5 Musashi 4 4 Darnell, Eleanor, and Kyoko are not optimizing over their choice of fruit. In the following table, indicate which fruit each consumer should increase consumption of in order to achieve the optimal fruit consumption bundle. Consumer Apples Pears Darnell Eleanor Kyoko
- 1. 2. Suppose Frank enjoys traveling and his utility is a function of the number of airplane trips he takes and the number of bus rides he takes. His utility function is given by U(b,p) = 3b0-4p0.8. A trip on a plane costs $400, a trip on the bus costs $50 and Frank has $3,000 to spend on travel. a. Draw Frank's budget line on a graph with bus trips on the vertical axis. b. Calculate AND INTERPRET the slope of Frank's budget line. c. Draw a representative indifference curve on your graph and provide a function that describes the slope of this indifference curve (i.e., find Frank's marginal rate of substitution). What is the INTERPRETATION of the marginal rate of substitution? d. What two conditions must be met in order for Frank to maximize his utility? e. What are the utility maximizing quantities of plane trips and bus trips for Frank? Given income of $1000, Px = 25 and Py = 40, find (1) a function for the MRS and (2) the utility maximizing consumption bundle for each of the…W 7 Ms. Bain maximizes 6. utility (given her budget constraint) at point X, skiing 2 days and spending 3 days horseback riding. Budget liņe Curve B U Y Curve A 1 Curve C V 1 2 3 4 5 6 7 Days of horseback riding per semester Part II Graph N 4. 3. Days of skiing per semesterSuppose that students only buy two goods: (i) Textbooks and (ii) Pens. The cost of a Textbook is $80 each. The cost of a pen is $4 each. Suppose that students have $600 to spend. 1. Draw the budget constraint for this problem. For full credit, be sure to label the y-intercept and x-intercept. Draw this with textbooks on the x-axis and pens on the y-axis
- 1) Suppose that Abel and Eden spend their incomes on two goods, food (F) and clothing (C).Abel’s preferences are represented by the utility function U(F,C)=10FC, while Eden’spreferences are represented by the utility function U(F,C)= 0.20F2C2A) With food on the horizontal axis and clothing on the vertical axis, identify on a graph theset of points that give Abel the same level of utility as the bundle (10, 5). Do the same forEden on a separate graph.B) On the same two graphs, identify the set of bundles that give Abel and Eden the samelevel of utility as the bundle (15, 8).C) Do you think Abel and Eden have the same preferences or different preferences? Explain 2. Graphically show the effect of an increase in price of Coca Cola on the demand of PepsiCola 3. Assume a budget line is drawn for two commodities: X on the x-axis and Y on the y-axis. Ifthe income of the consumer is 120 Birr, the y-intercept is 3, and the slope of the budget lineis -0.5 then determined the price of commodity…QUESTION 14 Refer to the information provided in Figure 6.15 below to answer the question that follows. Jason's preferences and budget constraint Number of sandwiches 150 0 B E A D C Number of hot dogs Figure 6.15 100 Refer to Figure 6.15. Why is Jason not maximizing his utility at point C? O He is not spending his entire budget. His marginal utility per dollar spent on the last sandwich is greater than his marginal utility per dollar spent on his last hot dog. His marginal utility per dollar spent on the last sandwich is less than his marginal utility per dollar spent on his last hot dog. O He is maximizing his utility at point C.Learning Journal prompt: For Unit 4 Learning Journal, you will use the marginal utility formula to choose between two products. Catherine is having dinner at the Yellow Restaurant. She wants desert after eating her entree. She is trying to decide between a cookie or a slice of pie. The cost of a cookie is $5 and the cost of a slice of pie is $8. Refer to the Unit 4 Learning Journal Marginal Utility spreadsheet Compute the marginal utility for cookie and slice of pie Compute the marginal utility per dollar What is the utility maximizing choice for a cookie and slice of pie? Explain what the utility maximizing choice means. Discuss how you could use marginal utility to make consumer choices