The budget constraint for a consumer who only buys apples (A) and bananas (B) is $ P_A A + P_B B = I $, where consumer income is $ I $, the price of apples is $ P_A $, and the price of bananas is $ P_B $. To plot this budget constraint in a figure with apples on the horizontal axis, we should use a budget line represented by what slope-intercept equation?

A consumer maximizes his utility by consuming at a point where the budget constraint of the…

Answered: The budget constraint for a consumer…

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Theory Of Consumer Choice

Section21.1: The Budget Constraint: What The Consumer Can Afford

Problem 1QQ

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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.
Linda loves buying shoes and going out to dance. It costs Linda $50 to buy a new pair of shoes or to spend an evening out dancing. Assume that she has $500 to spend on shoes and dancing. What is the equation for her budget line? Draw it with T on the vertical axis and label the slope and intercept.
Assume that a consumer has a given budget or income of $12 and that she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75. What is the slope of the budget line if the quantity of apples were measured on the horizontal axis and bananas on the vertical axis? −0.5 −0.8 −1.6 −2
For the following utility function, graphically depict the following set on a number line:
Write down the equation for the budget constraint and then graph it for .. Px = $100 Py = $25 Income = $5,000.00
1
Kate’s utility function includes coffee (c) and sugar (s). She only consumes coffee and sugar together, and she only consumes in the ratio of one unit (cup) of coffee with two units (spoons) of sugar. Her utility function is What is her marginal utility of sugar if she has 4 cups of coffee and 6 spoons of sugar? Remember that unit are infinitely divisible (you can have parts of units). (a) 0 (b) 1 (c) ½ (d) 2
Assume that a consumer can buy only two goods, X and Y, and has an income of $13,000. The price of X is $60 and the price of Y is $140. What is the slope of the budget line if X is measured horizontally and Y is measured vertically? Note that you will need to include a negative sign in your answer. If needed, round your answer to the nearest two decimal places.
Assume that the quantity of apples is measured on the horizontal axis and the quantity of oranges is measured on the vertical axis. If the budget line rotates upward while keeping the same horizontal intercept, it implies that
2) Suppose you have $400 that you can spend on goods 1 & 2. If the price of good 1 is $40, while the price of good 2 is $80, draw a budget line to illustrate your budget constraint (place good 1 on the horizontal and good 2 on the vertical axis). Make sure you label the axes. Also, calculate the slope of this budget line. Slope =
Please indicate the correct answer I am a bit confused
a) Suppose a consumer has a budget for fast-food items of $20 per week and spends this money on two goods, hamburgers and pizzas. Suppose hamburgers cost $5 each and pizzas cost $10. Put the quantity of hamburgers purchased per week on the horizontal axis and the quantity of pizzas purchased per week on the vertical axis. Draw the budget line. What is its slope (use MRS formula to calculate the slope)? b) Suppose the consumer in part (a) is indifferent among the combinations of hamburgers and pizzas shown. In the grid you used to draw the budget lines, draw an indifference curve passing through the combinations shown, and label the corresponding points A, B, and C. Label this curve I. Combinations Hamburgers/Week Pizzas/Week A 5 0 B 3 ½ C 0 3 c) The budget line is tangent to indifference curve, determine that point and explain the meaning of this tangency.

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