Microeconomics
10th Edition
ISBN: 9781259655500
Author: David C Colander
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 19.A, Problem 2QE
a)
To determine
The most and the least preferable budget constraints of Person Z.
b)
To determine
The marginal rate of substitution of hot dogs for video games.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
3. Tom's utility function is U (x; y) = 3x+4y: His budget constraint is ax + by = 1, a,b,I > 0 a) Derive the
demand function of x. b) Derive the demand function of y. c) Please draw the demand curve for y. d) If the price of x
increases from a to c; what would the value of the Hickis substitution effect of x be?
For Daniel, Pepsi and pizza are complementary products. He consumes a Pepsi with two slices of pizza. Daniel has $30,000 to spend between the two products. Each Pepsi costs $1,000 and a slice of pizza costs $2,000. Based on this information determine:
a) Locate the indifference curves and the budget constraint on a graph. Place the Pepsi on the horizontal axis and the pizza slices on the vertical axis.
b) What is the optimal consumption bundle?
c) What is the consumption decision if Pepsi goes up to $2,000?
d) How does the problem change if Daniel eats a slice of pizza for a Pepsi?
Please solve all parts.
13. Shawn likes to consume pineapple smoothies and hotdogs. His preferences are
represented by the utility function U(x,y) = 34x - x²/2 + y where x is his consumption of
pineapple smoothies and y is his consumption of hotdogs. The price of pineapple
smoothies is $2 and the price of hotdogs is $1. If the price of pineapple smoothies
increases to $6, the change in Shawn's consumer surplus is:
A) -144
B) -128
C) -120
D) -112
E) -90
Chapter 19 Solutions
Microeconomics
Ch. 19.1 - Prob. 1QCh. 19.1 - Prob. 2QCh. 19.1 - Prob. 3QCh. 19.1 - Prob. 4QCh. 19.1 - Prob. 5QCh. 19.1 - Prob. 6QCh. 19.1 - Prob. 7QCh. 19.1 - Prob. 8QCh. 19.1 - Prob. 9QCh. 19.1 - Prob. 10Q
Ch. 19.A - Prob. 1QECh. 19.A - Prob. 2QECh. 19.A - Prob. 3QECh. 19.A - Prob. 4QECh. 19 - Prob. 1QECh. 19 - Prob. 2QECh. 19 - Prob. 3QECh. 19 - Prob. 4QECh. 19 - Prob. 5QECh. 19 - Prob. 6QECh. 19 - Prob. 7QECh. 19 - Prob. 8QECh. 19 - Prob. 9QECh. 19 - Prob. 10QECh. 19 - Prob. 11QECh. 19 - Prob. 12QECh. 19 - Prob. 13QECh. 19 - Prob. 14QECh. 19 - Prob. 15QECh. 19 - Prob. 16QECh. 19 - Prob. 1QAPCh. 19 - Prob. 2QAPCh. 19 - Prob. 3QAPCh. 19 - Prob. 4QAPCh. 19 - Prob. 5QAPCh. 19 - Prob. 1IPCh. 19 - Prob. 2IPCh. 19 - Prob. 3IPCh. 19 - Prob. 4IPCh. 19 - Prob. 5IPCh. 19 - Prob. 6IPCh. 19 - Prob. 7IPCh. 19 - Prob. 8IPCh. 19 - Prob. 9IPCh. 19 - Prob. 10IP
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- The marginal utility for shoes and coffee is given below for five individuals. A pair of shoes costs $2, and a cup of coffee costs $1. Which of these consumers are optimizing over their choices? Explain For those who are not, how should they adjust their spending? Explain “Pasta is Miguel’s favorite meal therefore the law of diminishing marginal utility does not apply”. Do you agree with this statement? It is known that the indifference curve is convex. What does this tell you about the relationship between the goods? The income effect and the substitution effect work in the same direction for a normal good. Explain how this differs for an inferior good.arrow_forwardPlease Answer iv) A student living in a university hostel has two options for meals: eating at the dining hall for Rs.600 per meal, or eating a meal at Dhaaba for Rs.150 per meal. His weekly food budget is Rs. 6000 Draw the budget constraint showing the trade-off between dining-hall meals and meals at Dhaaba. Assuming that he spends equal amounts on both goods, draw an indifference curve showing the optimum choice. Label the optimum as point A. Suppose the price of a Dhaaba meal now rises to Rs.200. Assume that our student now spends only 30 percent of his income on dining-hall meals. Label the new optimum as point B. iv) Use points A and B to draw a demand curve for meals at Dhaaba. What is this type of good called?arrow_forwardPlease see the attached question.arrow_forward
- Draw the following scenario: Assume that Sam has well-behaved preferences and consumes hamburgers (vertical axis) and steak (horizontal axis). Further, Talib perceives hamburgers as an inferior good and steak as a normal good. Draw the effect of a decline in the price of steak on Sam’s optimal consumption of hamburger and steak. Make sure you show both substitution and income effects on both goods (axes).arrow_forwardSuppose that Dale consumes only coffee and cheese, both of which have diminishing marginal utility. For each of the following cases, determine whether Dale should 1Consume more coffee and less cheese, or2Consume less coffee and more cheese: 1.The marginal rate of substitution of cheese for coffee is 3 (i.e., the marginal utility of cheese is three times the marginal utility of coffee), while the price ratio is 2 (i.e., cheese costs twice as much as coffee). 2.The marginal rate of substitution of cheese for coffee is 1 (i.e., the marginal utility of cheese is equal to the marginal utility of coffee) while the price ratio is 2 (i.e., cheese costs twice as much as coffee). 3.The marginal rate of substitution is initially equal to the price ratio, but the price of coffee increases. 4.The marginal rate of substitution is initially equal to the price ratio, but the price of cheese decreases. 5.The marginal rate of substitution is initially equal to the price ratio, but Dale enters exam…arrow_forward1. Jim's preferences for pears and apples can be summarized by the following utility function: U(Xa,Xp)=XaXp where xa is the quantity of apples and xp is the quantity of pears. a) Draw an indifference curve for Jim by calculating a series of bundles that all produce the same level of "utility" and plotting them. Interpret the slope of the indifference curve (the marginal rate of substitution). b) Calculate the formula for Jim's marginal rate of substitution, as a function of apples and pears consumed.¹ c) What happens to the numeric value of Jim's marginal rate of substitution along an indifference curve (i.e., holds his utility constant) as he increases the number of pears he consumes and decreases the number of apples? For example, compare his MRS for a bundle consisting of 9 apples and 4 pears to his MRS for a bundle consisting of 9 pears and 4 apples and interpret the change. d) Suppose something increases Jim's desire for apples (for example, apples are found to reduce the risk of…arrow_forward
- Please Explainarrow_forwardTyped answer.arrow_forward8. Normal and inferior goods Shen likes going to the ballpark to watch baseball, and he also is fond of going to the theater to listen to the symphony orchestra. The following diagram shows two of Shen's Indifference curves for going to ballgames and symphonies. With Shen's initial budget constraint (BC₁), he chose to go to five symphonies and three baseball games per month (point X). Then his budget constraint shifted to BC₂, and he chose to go to four symphonies and six ballgames per month (point Y). BALLGAMES 0 0 5 SYMPHONIES BC 8 goods. BC 10 ? of the following choices, which could have shifted Shen's budget constraint from BC, to BC₂? Check all that apply. The price of baseball tickets Increased while his income and the price of symphony tickets stayed the same. The prices of both baseball and symphony tickets decreased while his income stayed the same. His Income increased while the prices of baseball and symphony tickets stayed the same. His Income decreased while the prices of…arrow_forward
- i) Derive consumer's budget constraint ii) Derive the marginal utility X and marginal utility Y iii) Find out the consumer optimum combination of good X and Y at the market.arrow_forward2. Sally consumes two goods, X and Y. Her utility function is given by the expression U = 3XY². The current market price for X is £10, while the market price for Y is £5. Sally's current in come is £500. (a) Sketch a set of two indifference curves for Sally in her consumption of X and Y. (b) Write the expression for Sally's budget constraint. Graph the budget constraint and determine its slope. (c) Determine the X,Y combination which maximises Sally's utility, given her budget constraint. (d) Calculate the impact on Sally's optimum market basket of an increase in the price of X to $15. What will happen to her utility as a result of the price increase?arrow_forwardRick consumes 2 goods, Chicken McNuggets (M) with Szechuan sauce (S). His utility function is U(M, S) = M2/3 S1/3 and his income is m. The price of Chicken McNuggets is p, and the price of Szechuan sauce is 1. On the same graph, show the income and substitution effects of the increase in p from 1 to 2 on Rick’s consumption of Chicken McNuggets. Are Chicken McNuggets a normal or inferior good for Rick? Explain your answer.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning