Suppose the price of Pizza is $10 the price of cola is $1, and the consumer's income is $60. In addition suppose the consumer's budget constraint measures pizza on the horizontal axis and cola on the vertic axis. If the consumer's income rises to $100 while the prices of pizza and cola are constant, then the budget line for pizza and cola would ? a- not change b- now intersect the horizontal axis at 12 pizzas and the vertical: axis at 120 colas C- now intersect the horizontal axis at 10 pizzas and the vertical axis at 100 colas d- would rotate along the cola axis

Suppose the price of Pizza is $10 the price of cola is $1, and the consumer's income is $60. In addition suppose the consumer's budget constraint measures pizza on the horizontal axis and cola on the vertic axis. If the consumer's income rises to $100 while the prices of pizza and cola are constant, then the budget line for pizza and cola would ? a- not change b- now intersect the horizontal axis at 12 pizzas and the vertical: axis at 120 colas C- now intersect the horizontal axis at 10 pizzas and the vertical axis at 100 colas d- would rotate along the cola axis

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

Sally consumes two goods, X and Y. Her utility function is given by the expression U = 2XY3. The current market price for X is $20, while the market price for Y is $10. Sally's current income is $500. a. Write the equation for Sally's budget constraint. What is the slope of her budget line? b. Determine the X,Y combination which maximizes Sally's utility, given her budget constraint.
Suppose that a there are two goods, X and Y. The price of Good X is $5 and the price of Good Y is $10. The seller of Good X offers a deal where if a consumer buys 1 unit of Good X they pay full price, but the second unit of Good X is only $3. Calculate the slope of the budget constraint between 1 unit of Good X and 2 units of Good X.
Assume that you are on an island where there are only two commodities—coconuts and pineapples—and you can spend your income only on these two foods. If the price of coconuts is Pc and the price of pineapples is Pp and your income is I, draw a budget constraint, carefully labelling the points on the two axes and where the attainable and unattainable portions of consumption are. Note: you can choose any Pc and Pp that you like—they do not have to be equal. What is the slope of this budget constraint? What is the economic interpretation of the slope? Now, let’s bring a little more structure to this diagram. Let I=£200, Pc=£1 per coconut and Pp=£2 per pineapple. Draw a new diagram using these numbers. Consider these questions: How many coconuts can you buy if you do not buy any pineapples? How many pineapples can you buy if you do not buy any coconuts? What is the slope and what economic information does it give us? Show the point of 100 coconuts and 100 pineapples on your diagram. Can…
Joe is currently in consumer equilibrium by consuming cheese and crackers, such that the last cracker consumed yielded 8 utils and the last piece of cheese consumed yielded 12 utils. Assume the price of crackers is two cents per cracker and the price of cheese is three cents per piece. If the price of crackers increases to four cents, Joe should his consumption of crackers and his marginal utility from crackers will and also his consumption of cheese and his marginal utility from cheese will (Assume he is in the downward sloping portion of the MU curve.) Ο Ο Ο decrease; increase; increase; decrease increase; increase; increase; increase increase; decrease; increase; decrease increase; increase; decrease; decrease
Alex distributes his monthly income of $600 between two goods, movies and food. By spending his entire income on movies, he can enjoy a maximum of 20 movies. On the other hand, by spending his entire income on food he can consume a total of 60 units of food. Assume that food consumption is measured along the horizontal axis and the consumption of movies is measured on the vertical axis. Calculate the slope of Alex's budget line when the price of food increases to $20 while the price of movie remains unchanged. -2/3 - 1.5 -2 -3/4
1) Max chooses to purchase movie tickets and restaurant meals every week with his $100. If the price of a movie ticket is $20 and the price of a restaurant meal is $25, then the slope of his budget constraint will be, a) 1/5 b) -1/5 c) 4/5 d) -4/5 2) Marginal rate of substitution(MRS) is the rate at which consumer is willing to trade one good for another. It must be true that: a) MRS is the slope of an indifference curve in reference to a particular bundle of goods. b) MRS is not the same along an indifference curve that is of usual shape. c) MRS is same along an indifference curve that is of usual shape. d) Both a) and b).
Suppose Lorenzo has a weekly budget of $48 to spend on ranch dressing and peanut butter. Ranch dressing is priced at $4 per bottle, and peanut butter is priced at $6 per jar. If Lorenzo spends his entire $48 on ranch dressing, he can buy jars of peanut butter. buy Use the blue line (circle symbol) to plot Lorenzo'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 peanut butter that are affordable for Lorenzo. Finally, place the black point (plus symbol) on the point on Lorenzo's budget constraint that corresponds to a scenario in which Lorenzo spends $24 on each good. Note: Dashed drop lines will automatically extend to both axes. PEANUT BUTTER (Jars) 24 22 20 18 2 0 + 0 2 4 12 14 16 18 20 22 bottles of ranch dressing. If he spends his entire $48 on peanut butter, he can 6 8 RANCH DRESSING (Bottles) O True False BC, ($48) O Affordable Region $24 on Each What does the slope of…
Describe and graph your own example of a budget constraint using two goods (don’t forget to label your axes). In your example, make sure to state what the budget is, the price of the two goods, what the slope of the budget constraint equals (make sure to include the correct sign), and interpret what the slope represents.
Kate has $20. Fish sandwiches cost $5, and a cup of hot chocolate costs $4. What happens to Kate’s budget constraint If hot chocolate goes on sale for $2 a cup?
Sarah likes basketball games and going to movies. Every month he has $480 to spend on the two activities. Ticket price of a basketball game is $15 and price of a ticket to movies is 12$. Write the budget constraint equation and draw the budget constraint for Sarah.
Consumer choiceJo buys muffins and cupcakes at a bakery. Jo’s weekly budget for baked goods is $70. The priceof muffins is $1.25. The price of cupcakes is $1.75.a) Write down Jo’s budget constraint: express the quantity of cupcakes as a function of thequantity of muffins.
A consumer is choosing between magazines and books. His set of čonsumer optimums are shown on the graph to the right. 50 Consumer income allocated for these two goods is equal to $150. The price of magazines (P,) is equal to $5.00. 45- 40 How do these changes in the price of books affect the demand for magazines? 35 demand remains constant 30- We can consider books and magazines to be goods. 25- 20- 15- PCC substitute 10- 5- complementary 0- O 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 unrelated Books O étv 21 MacBook Air DII 80 F10 F11 F7 FB F9 F6 F4 F5 F3 F1 F2 * @ # $ 7 8 9 1 2 4 P T Y Q W J K S F く Z C V command oF option command O 回 .. - つエ B ** A.