-sume we are measuring coffee on the horizontal axis and flowers on the vertical axis. The government introduces a tax on coffee consumed beyond C units. What will happen the budget constraint? The budget constraint will become kinked at C" units of coffee and will have a flatter slope at units beyond C". The budget constraint will pivot inwards around the horizontal intercept. O The budget constraint will pivot outwards around the vertical intercept. O The budget constraint will shift outwards and become steeper. O The budget constraint will become kinked at C* units of coffee and will have a steeper slope at units beyond Cº. O No answer.

-sume we are measuring coffee on the horizontal axis and flowers on the vertical axis. The government introduces a tax on coffee consumed beyond C units. What will happen the budget constraint? The budget constraint will become kinked at C" units of coffee and will have a flatter slope at units beyond C". The budget constraint will pivot inwards around the horizontal intercept. O The budget constraint will pivot outwards around the vertical intercept. O The budget constraint will shift outwards and become steeper. O The budget constraint will become kinked at C* units of coffee and will have a steeper slope at units beyond Cº. O No answer.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2. Zhoran has a budget of $36 for fruit. Strawberries cost $4 per pound and grapes cost $3 per pound. She likes both type of fruit and she has a diminishing marginal rate of substitution. (a) Draw a diagram illustrating Zhoran's budget constraint. Label both intercepts with their numerical values. What is the slope of her budget line? (b) Illustrate Zhoran's optimal combination of strawberries and grapes on your dia- gram. Any picture that is consistent with the facts described here is acceptable. Explain how your diagram demonstrates that the point you've chosen is the op- timal point for Zhoran. (c) Suppose Zhoran's budget increases to $48. How will this change her consumption decision? Illustrate your answer on your diagram and explain your picture.
. TOTAL AND MARGINAL UTILITY E UTILITY CALCULATIONS Reset Total Utility Quantity Consumed Total Marginal Utility 70 Utility 60 50 22 40 1 22 30 18 20 2 40 10 14 3 4 6 8 3 54 Quantity Consumed Marginal Utility 10 20 4 64 6. 10 70 4 6. -10 72 -20 -2 Quantity Consumed 70 Quantity Consumed -6 8 64 2. 4 6 8
Graphical and Intuitive Optimization Consider a consumer who must allocate their available income between the consumption of two goods, Beer and Pizza. Their preferences over Beer and Pizza adhere to the usual assumptions we have made about preferences. The indifference curve map below reflects their preferences and the budget constraint reflects current income and prices. In the simplest terms possible, define or explain the term "Marginal Utility of Beer" (MUB). In the simplest terms possible, define or explain the term "Marginal Rate of Substitution of beer for pizza" (MRSBP). In the simplest terms possible, intuitively explain the meaning of MUB/PB, where PB represents the price of one unit of Beer.
4. What is the difference between substitution and complementary goods? Give an example for each goods! What will happen to quantity demanded of X if a price of substitutes goods decreased and to quantity demanded of Y if a price of complements goods decreased? Show with graph!
Marginal utility is O a. the extra satisfaction derived from consuming an additional unit of a good. Ob. the total satisfaction derived from consuming an additional unit of a good. O c. the total satisfaction derived from consuming a good. d. the change in total satisfaction as an additional unit of a good is consumed. O e. a and d
The diagram below shows the Total Effect (the sum of Income & Substitution Effects) when the budget line moves from BO to BI, it shows that; Substilie. Effact Toral Effect O a. Price of X increase and X is Giffen good. O b. Price of X decreases and X is normal good. O c. Price of X increase and X is inferior good. Price of X incregse and X is normgl good.
11 Refer to Figure 3. Assume Tom is on budget constraint AC. If the price of a hamburger is $5, Tom's monthly income is Select one: a. $20 b. $300 c. $60 d. $100
You are choosing between two goods, X and Y, and your marginal utility from each is shown in the following table. Units of X MUx Units of Y MUy 1 10 1 8 2 8 2 7 3 6 3 6 4 4 4 5 5 3 5 4 6 2 6 3 a. If your income is $9 and the prices of X and Y are $2 and $1, respectively, what quantities of each will you purchase to maximize utility? ______units of X and ______units of Y b. What total utility will you realize? ______utils c. Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase? _____units of X and ______units of Y d. Using the two prices and quantities for X, complete the table to derive the demand schedule (a table showing prices and quantities demanded) for X. Instructions: Start with the highest price first Price of X Quantity Demanded of X $ $
14
Suppose that price of good X rises by 25 % while price of Y rises by 50% and Income rises by 50%. Then which of the following is correct? O Budget line becomes flatter and consumer is able to afford new bundles that were not affordable before. Budget line becomes steeper and consumer is not able to afford some bundles that were affordable before. Budget line becomes flatter and consumer is not able to afford some bundles that were affordable before. Budget line becomes steeper and consumer is able to afford new bundles that were not affordable before.
Assume we are measuring coffee on the horizontal axis and flowers on the vertical axis. The government introduces a tax on coffee consumed beyond C* units. What will happen to the budget constraint? O The budget constraint will become kinked at C* units of coffee and will have a flatter slope at units beyond C*. O The budget constraint will pivot inwards around the horizontal intercept. O The budget constraint will pivot outwards around the vertical intercept. O The budget constraint will shift outwards and become steeper. O The budget constraint will become kinked at C* units of coffee and will have a steeper slope at units beyond C*. O No answer.
The amount/limit of income a consumer has to spend on goods and services is known as O a budget constraint. wealth. O purchasing power. effective demand.