Suppose a consumer wants to buy a new house and has a budget of 50 million. The consumer cares only about the size (S) of the house and the quality of construction (Q) of the house. Assume that if the consumer wants one more unit of size, then the builder wants 10 million. If the consumer wants one more unit of quality, then the builder wants 5 million. (a) Draw the consumer's budget line for size and quality. Place size on the horizontal axis. (b) Suppose the consumer's preferences are such that the marginal rate of substitution is equal to (-4S)/Q. What value of each index will the consumer like to have in her house?( ( (c) Suppose the consumer's marginal rate of substitution is (-S)/Q. What value of each index will the consumer like to have in her house?

Suppose a consumer wants to buy a new house and has a budget of 50 million. The consumer cares only about the size (S) of the house and the quality of construction (Q) of the house. Assume that if the consumer wants one more unit of size, then the builder wants 10 million. If the consumer wants one more unit of quality, then the builder wants 5 million. (a) Draw the consumer's budget line for size and quality. Place size on the horizontal axis. (b) Suppose the consumer's preferences are such that the marginal rate of substitution is equal to (-4S)/Q. What value of each index will the consumer like to have in her house?( ( (c) Suppose the consumer's marginal rate of substitution is (-S)/Q. What value of each index will the consumer like to have in her house?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Advertisement is one of the factors that influence customers to increase demand for a specific good. Explain how the budget line shift due to price change of good Y when the price of good X remains the same.
Abby, Bobbi, and Deborah each buy ice cream and paperback novels to enjoy on hot summer days. Ice cream costs $5 per gallon, and paperback novels cost $8 each. Abby has a budget of $80, Bobbi has a budget of $60, and Deborah has a budget of $40 to spend on ice cream and paperback novels. Which of the following statements is correct? Group of answer choices a. Each woman faces the same budget constraint. b. The slope of the budget constraint is the same for each woman. c. The area underneath the budget constraint is larger for Deborah than for Abby. d. All of the above are correct. T MacBook Air
Suppose you had a budget of $20.00 and the prices of a burger and a slice of pizza are $5.00 and $2.00 respectively. What would be your optimal consumption bundle?
Optimal consumption refers to Multiple Choice the mix of products that maximizes total utility for the limited amount of income consumers have to spend. the total number of products that maximizes total utility for consumers. the maximum total utility a consumer receives by the consumption of one more item. the amount demanded that will create the strongest economy.
You like candy and cake. After using your entire $30 budget at the sugar store, you find that the marginal utility from the last candy you consumed was 60 and the last piece of cake was 30. Assuming you have maximized your utility and the price of a piece of candy is $4, calculate the price of cake? Do not enter dollar signs. Answer:
Use the following information to answer questions 1 through 8: A student has a monthly budget of $120 to spend on either burritos, which cost $6 each, or sodas, which cost $4 each. What is the largest number of burritos that the student could afford to purchase in one month? What is the largest number of sodas the student could afford to purchase in one month?
part C D
Consider a graph with paper on the x-axis and pencils on the y-axis. If the price of pencils increases, then (select all that apply): Check All That Apply the budget constraint will become steeper (the absolute value of the slope will increase).the budget constraint will become steeper (the absolute value of the slope will increase). the budget constraint will become flatter (the absolute value of the slope will decrease). the budget constraint will become flatter (the absolute value of the slope will decrease). the slope of the budget constraint will not change.the slope of the budget constraint will not change. the x-intercept will increase.the x-intercept will increase. the x-intercept will decrease.the x-intercept will decrease. the x-intercept will not change.the x-intercept will not change. the y-intercept will increase.the y-intercept will increase. the y-intercept will decrease.the y-intercept will decrease. the y-intercept will not…