The graph shows Esther's best affordable point at A. The price of seeing a movie falls and Esther's new best affordable point is C. Draw a budget line that isolates the substitution effect. Label it B₂. Draw a point to indicate where Esther consumes if she faces the budget line you've drawn. Label it B. B₁ Movies (per month)

The graph shows Esther's best affordable point at A. The price of seeing a movie falls and Esther's new best affordable point is C. Draw a budget line that isolates the substitution effect. Label it B₂. Draw a point to indicate where Esther consumes if she faces the budget line you've drawn. Label it B. B₁ Movies (per month)

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 8SQP

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The graph shows Esther's best affordable point at A. The price of seeing a movie falls and Esther's new best affordable point is C. Draw a budget line that isolates the substitution effect. Label it B3. Draw a point to indicate where Esther consumes if she faces the budget line you've drawn. Label it B. What is Esther's substitution effect and income effect? For Esther, the substitution effect is the movement from movement from A. point C to point B; point B to point A B. point A to point B; point B to point C C. point A to point C; point C to point B D. point B to point C; point C to point A and the income effect is the C 8- 6- 4- 2- 0- Magazines (per month) 0 A 2 B₁ с 12 4 6 Movies (per month) >>> Draw only the objects specified in the question. B₂ 8
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Raymond consumes meatloaves and pineapples. He has decided that his monthly budget will be $1500. Suppose that one meatloaf costs $375, while one pineapple costs $150. c. Show how Raymond’s budget line changes if the price of pineapples increases to $370. d.. Suppose Raymond decides to cut his monthly budget in half. Coincidentally, the next time he shops, he learns that meatloaves and pineapples are on sale for half price. Show what happens to Raymond’s budget line?
The total utility schedule of Sharon is given below for the number of shoes she consumes. i. Calculate Sharon’s marginal utility schedule. ii. Plot a graph of total and marginal utility.iii. What is the maximum number of shoes that Sharon will consume? Explain
. Kawther’s income is OMR12 a week. The price of small-sized pizza is OMR3, and the price of a fresh juice is OMR3. Calculate the equation for Kawther’s budget line and illustrate all options on the table. Draw a graph of Kawther’s budget line with the quantity of fresh juice on the x-axis. Kawther’s income is OMR12 a week. The price of small-sized pizza rises from OMR3 to OMR6, and the price of a fresh juice is unchanged at OMR3. Explain how Kawther’s budget line changes with fresh juice on the x-axis.
The total utility schedule of Sharon is given below for the number of shoes she consumes. i. Calculate Sharon’s marginal utility schedule. ii. Plot a graph of total and marginal utility. iii. What is the maximum number of shoes that Sharon will consume? Explain Number of Shoes Total Utility Marginal Utility1 100 2 2003 2754 3255 3506 3607 3608 355 b. Assume that Mania has $1,200 per month to spend between dinners at a Japanese restaurant and evenings at Cru, a local bar. Assume that going to Cru costs $25 and eating at the restaurant costs $14. a. Draw Mania’s budget constraint with restaurants on the horizontal axis.b. Suppose…
The graph shows the budget line for a consumer who only buys cookies and magazines. If the consumer's income is $20, what is the price of a Magazine? 24 20 16 4 2 4 6 8 10 12 Magazines (number per week) dollar(s) Cookies (number per week)
The following table shows the total utility gained from the consumption ofFanta Lemon in a week.left is quantity and right is total utility 1-20 2-35 3-45 4-53 5-58 6-58 7-481. Calculate the marginal utility. What do you observe?2. Sketch the total utility and marginal utility curves.3. If the price of Fanta Lemon increases from Rs.8 to Rs.10, how will itaffect its consumption?Explain your answer using the data above.
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Andy drinks hot chocolate every week throughout the winter. Draw a curve that illustrates Andy's total utility from hot chocolate. Start your curve at the origin and label it. Andy's total utility from hot chocolate depends on A. his income but not the price of hot chocolate B. the quantity of hot chocolate he consumes C. the price of hot chocolate but not his income D. both the price of hot chocolate and his income COLO 100 80- 60- 40 20- Units of utility 8 Quantity (mugs of hot chocolate per week) >>> Draw only the objects specified in the question. F2 f2 12 12