8. An individual's budgetSuppose Carlos has a yearly budget of $160 to spend on milk and cereal. Milk is priced at $4 per gallon, and cereal is priced at $2 per box.If Carlos spends his entire $160 on milk, he can buyCEREAL (Boxes)Use the blue line (circle symbol) to plot Carlos's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the areathat represents combinations of milk and cereal that are affordable for Carlos. Finally, place the black point (plus symbol) on the point on Carlos's budgetconstraint that corresponds to a scenario in which Carlos spends $80 on each good.Note: Dashed drop lines will automatically extend to both axes.12011010090807060504030201000 10 20 30gallons of milk. If he spends his entire $160 on cereal, he can buy40 50 60 70MILK (Gallons)80 90 100 110 120BC, ($160)Affordable Region$80 on Eachboxes of cereal.BC₂ ($200) What does the slope of Carlos's budget constraint represent?The cost of an additional gallon of milk in terms of dollarsThe opportunity cost of an additional box of cereal in terms of gallons of milkThe cost of an additional box of cereal in terms of dollarsThe opportunity cost of an additional gallon of milk in terms of boxes of cerealSuppose Carlos receives $40 from his grandmother and decides to dedicate this money to buying more milk and cereal.Using the green line (triangle symbol), draw Carlos's new budget constraint on the previous graph.True or False: Carlos faces the same tradeoff between milk and cereal.TrueFalse

This can be defined as the concept that shows what an individual give up when an individual choose…

Suppose Carlos has a yearly budget of $160 to spend on milk and cereal. Milk is priced at $4 per gallon, and cereal is priced at $2 per box. If Carlos spends his entire $160 on milk, he can buy gallons of milk. If he spends his entire $160 on cereal, he can buy boxes of cereal. Use the blue line (circle symbol) toplot Carlos's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the area that represents combinations of milk and cereal that are affordable for Carlos. Finally, place the black point (plus symbol) on the point on Carlos's budget constraint that corresponds to a scenario in which Carlos spends $80 on each good. Note: Dashed drop lines will automatically extend to both axes.

Suppose Carlos has a yearly budget of $160 to spend on milk and cereal. Milk is priced at $4 per gallon, and cereal is priced at $2 per box. If Carlos spends his entire $160 on milk, he can buy gallons of milk. If he spends his entire $160 on cereal, he can buy boxes of cereal. Use the blue line (circle symbol) toplot Carlos's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the area that represents combinations of milk and cereal that are affordable for Carlos. Finally, place the black point (plus symbol) on the point on Carlos's budget constraint that corresponds to a scenario in which Carlos spends $80 on each good. Note: Dashed drop lines will automatically extend to both axes.

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

Last week Sara’s income was $12 a week. The price of popcorn was $3 a bag, and the price of a smoothie was $3.e. Draw a graph of Sara’s budget line with the quantity of smoothies on the x-axis.f. What is the slope of Sara’s budget line? What determines its value?
Graham brings $20 to his local college hockey game in order to purchase cheeseburgers and seltzer. The following diagram presents his budget constraint: CANS OF SELTZER 10 6 B 5 4 3 r 0 1 2 BC 4 5 6 CHEESEBURGERS 7 According to the diagram, cheeseburgers cost $ 8 9 10 BC each, and seltzer costs $ (?) per can. Adjust the diagram to show how Graham's budget constraint would change if the price of seltzer decreased. (Assume the price of cheeseburgers and Graham's income remain the same.) Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther.
Ria earns an income of $2,000 per month Assume that she can either buy 5 laptops or 10 mobile phones with her income. The price of laptops is $400, and the price of the mobile phone is $200 Suppose Ria's income increases by 20% and the price of the laptops decreases to $300, what will be the offect on the budget constraint? 1) Using the line drawing fool, draw a new budget constraint representing the given effects Carefully follow the instructions above and only draw the required object The new budget constraint has a different than the initial budget constraint. CARD Quantity of mobile phone 11- 10- 8 9 10 11 12 Quantity of laptop ROO
Pam has a monthly budget of £120 to be spent on T-shirts and trainers. She could afford to buy two T-shirts and two pairs of trainers. She could also buy eight T-shirts. In each case, she would be spending her entire monthly allowance. Calculate the price of a T-shirt and the price of a pair of trainers. Write down Pam’s budget equation and draw the corresponding budget line. Mark the two consumption bundles mentioned above. In your graph, clearly label the axes, the budget line, and calculate the coordinates of the points of intersection of the budget line with each axis. Interpret each of those points. Discuss how Pam’s budget set would change if the price of a T-shirt doubles. Show the relevant changes graphically. How should Pam’s income change so that she could still afford to buy two T-shirts and two pairs of trainers? Discuss how Pam’s budget constraint would change if the government imposed a tax of £3 per each pair of trainers.
Show full answers to a) b) & c)
Luke has a monthly income of $80. He spends this money making telephone calls from home (measured in minutes of calls) and on other goods. His mobile phone company offers him two plans: Plan A: Pay no monthly fee and make calls for $0.50 per minute. Plan B: Pay a $30 monthly fee and make calls for $0.1 per minute. Graph Luke’s budget constraint under each of the two plans.
Antonio buys five new college textbooks during his first year at school at a cost of $80 each. Used books cost only $50 each. When the bookstore announces that there will be a 50 percent increase in the price of new books and a 50 percent increase in the price of used books, Antonio's father offers him $200 extra. What happens to Antonio's budget line? 1.) Using the line drawing tool, graph Antonio's original budget line. Label this line L₁. 2.) Using the line drawing tool, then graph Antonio's new budget line. Label this line L₂. Carefully follow the instructions above, and only draw the required objects. CIT New Books 12- 11- 10- 9- 8- 7- 6- 5- 4- 3- 2- 1- 0- 0 1 2 3 5 6 8 9 10 11 12 Used Books
A consumer has an annual budget constraint for two goods: “housing sq. ft." and "$ for everything else". Draw the budget constraint for this consumer if income (v) = $50,000 and price per sq. ft. of housing, ph, is S200. Please be sure to fully label your graph (i.e., slope, intercept, etc.). Note: plot "housing sq. ft." on the x-axis. How would this consumer's budget line change if she received a $5,000 raise and the price of housing increased to $250? Include a graph with your answer. How did the economic rate of substitution (ERS) between housing and $ for everything else change when pa changed? Please interpret the ERS both before and after the price change.
Use Figure: Budget Lines for Tangerines and Watermelons. For some time, Albert has had $5 per month to spend on tangerines and watermelons. The price of a tangerine is $0.50, and the price of a watermelon is $0.25. Which chart shows what will happen to his budget line if his income increases to $6?
Maya divides her income between coffee and croissants (both of which are normal goods). An early frost in Brazil causes a large increase in the price of coffee in the United States. On the following graph, show the effect of the frost on Maya's budget constraint (BC).
The nearby graph shows Charlie's budget constraint for purchases of shoes and purses. Number of 12 purses 10 8 6 4 2 0 Your answer Budget line with discount Budget line no discount 0.5 1 1.5 2 2.5 Number of pairs of shoes If Charlie's monthly budget for shoes and purses is $100 and they buy more than 2 purses, the price of purses is $. _. (Enter your answer as integers without the dollar sign.)
Ravi has £21 to spend on pastries and biscuits. If he spends all the money on pastries, he can afford 15 pastries. The slope of Ravi’s budget line (assuming his pastries consumption is measured on the horizontal axis and his biscuits consumption is measured on the vertical axis) is -3.5 (3.5 in absolute terms). Calculate the price of a pastry and the price of a biscuit. Write down Ravi’s budget equation and draw the corresponding budget line. Mark the consumption bundle mentioned above. In your graph, clearly label the axes, the budget line, and calculate the coordinates of the points of intersection of the budget line with each axis. Interpret each of those points. Discuss how Ravi’s budget set would change if his budget doubles. Show the relevant changes graphically. How could the price of a pastry increase so that Ravi could still afford to buy 15 pastries? Discuss how Ravi’s budget constraint would change if the government imposed a tax of £0.50 per pastry and £0.50 per biscuit.