Principles of Economics, 7th Edition (MindTap Course List)
Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
Question
Book Icon
Chapter 21, Problem 4QR
To determine

The optimum level of consumption of cheese and wine.

Blurred answer
Students have asked these similar questions
Peter loves spicy food. He consumes both Laoganma chili crisp and Texas Pete hot sauce. His annual budget curve maps from (20 bottles of Laoganma, 0 cups of Texas Pete) to (0 bottles of Laoganma, 24 bottles of Texas Pete). a) Draw his budget constraint. Express the price of Texas Pete, in terms relative to the price of Laoganma. b) Given this set up, would Peter ever consume at the following points of (#bottles of Laoganma, #bottles of Texas Pete)? Why/why not? If we would consume at this point, draw an indifference curve that would justify this decision.i) (12, 12) ii) (6, 15) iii) (6, 6) iv) (12, 10) c) Imagine that Peter consumes 4 bottles of Laoganma. How many bottles of Texas Pete will he consume?d) Now imagine that the price of Texas Pete doubles. Draw the new budget constraint in Laoganma / Texas Pete space. e) Assume Peter goes from the consumption point found in part c of this question to a new point where he consumes 5 bottles of Laoganma to some new consumption point defined…
Carlos is originally consuming his optimal consumption bundle of cell phones and gasoline when the price of gasoline falls. Assume that both gasoline and cell phones are normal goods. How will a decrease in the price of gasoline affect your consumption of cell phones and gasoline? Explain using the substitution and income effects.
Harry consumes 2 goods, X and Y and he spends N$60 per month. The price of good X is N$4 and the price of good Y is N$10. Harry's utility function is U(X, Y) = XY. (i) What is Harry's marginal rate of substitution? (5) (ii) What is the expression for Harry's budget constraint? (3) (iii) What is the slope of Harry's budget constraint? (2) (iv)Find the values of good X and Y maximizes Harry's utility. Show all your work. (6) (v) Illustrate Harry's utility maximizing combination on a clearly labelled graph. (4) (vi) Suppose the price of good X increased to N$6. Illustrate Harry's income and substitution effects on a well labelled graph. Show your work. (10) (vii) Suppose Genie is consuming two goods, coffee and beer. She spends all her income on a combination of coffee and beer where MUcoffee/Peoffee is 5 and MUbeer/Pbeer is 3. Explain why this combination is not maximizing her satisfaction. What should she do to maximize her utility? (5)
Knowledge Booster
Background pattern image
Similar questions
Recommended textbooks for you
Text book image
Micro Economics For Today
Economics
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Cengage,
Text book image
Principles of Microeconomics
Economics
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Text book image
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Text book image
Economics For Today
Economics
ISBN:9781337613040
Author:Tucker
Publisher:Cengage Learning
Text book image
Microeconomics A Contemporary Intro
Economics
ISBN:9781285635101
Author:MCEACHERN
Publisher:Cengage
Text book image
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning