Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Question
Chapter 6, Problem 12SQ
To determine
The impact of decrease in demand when the supply held constant.
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Suppose you have a budget of 30 to spend on two goods: pizzas and burgers. Each pizza is $5 while each burger is $10. Suppose you already purchased 6 pizzas. What is the maximum number of burgers that you can buy with the remaining funds in your budget?
A consumer has income of $15,000. Pillows costs $35 per pillow, and soda costs $70 per
bottle.
a. Draw the consumer's budget constraint (put pillow on the horizontal axis). What
is the slope of this budget constraint?
b. Suppose his income increases from $15,000 to $20,000. Illustrate what happens if
both pillows and soda are normal goods.
c.
The price of pillows rises from $35 to $40 per pillow, while the price of sodas is
unchanged. For a consumer with constant income of $15,000, show what happens
to consumption of both goods (assume both goods are normal goods). Decompose
the change into income and substitution effects.
d. Under what circumstance(s) if any can an increase in the price of pillows induce a
consumer to buy more of that good? Explain.
e. Explain how a consumer should allocate expenditure in order to achieve
maximum satisfaction and analyse how a rise in income might affect that
allocation.
A consumer currently spends a given budget on two goods, X and Y, in such quantities that the marginal utility of X is 15 and the marginal utility of Y is 8. The unit price of X is $3 and the unit price of Y is $2. The utility-maximizing rule suggests that this consumer should Multiple Choice
a. decrease consumption of product X and increase consumption of product Y.
b. increase consumption of product X and increase consumption of product Y.
c. decrease consumption of product Y and increase consumption of product X.
d. stick with the current consumption mix because it yields maximum utility.
Chapter 6 Solutions
Micro Economics For Today
Ch. 6.1 - Prob. 1YTECh. 6.1 - Prob. 2YTECh. 6.2 - Prob. 1YTECh. 6.A - Prob. 1SQPCh. 6.A - Prob. 2SQPCh. 6.A - Prob. 3SQPCh. 6.A - Prob. 1SQCh. 6.A - Prob. 2SQCh. 6.A - Prob. 3SQCh. 6.A - Prob. 4SQ
Ch. 6.A - Prob. 5SQCh. 6.A - Prob. 6SQCh. 6.A - Prob. 7SQCh. 6.A - Prob. 8SQCh. 6.A - Prob. 9SQCh. 6.A - Prob. 10SQCh. 6.A - Prob. 11SQCh. 6.A - Prob. 12SQCh. 6.A - Prob. 13SQCh. 6.A - Prob. 14SQCh. 6.A - Prob. 15SQCh. 6 - Prob. 1SQPCh. 6 - Prob. 2SQPCh. 6 - Prob. 3SQPCh. 6 - Prob. 4SQPCh. 6 - Prob. 5SQPCh. 6 - Prob. 6SQPCh. 6 - Prob. 7SQPCh. 6 - Prob. 8SQPCh. 6 - Prob. 9SQPCh. 6 - Prob. 10SQPCh. 6 - Prob. 1SQCh. 6 - Prob. 2SQCh. 6 - Prob. 3SQCh. 6 - Prob. 4SQCh. 6 - Prob. 5SQCh. 6 - Prob. 6SQCh. 6 - Prob. 7SQCh. 6 - Prob. 8SQCh. 6 - Prob. 9SQCh. 6 - Prob. 10SQCh. 6 - Prob. 11SQCh. 6 - Prob. 12SQCh. 6 - Prob. 13SQCh. 6 - Prob. 14SQCh. 6 - Prob. 15SQCh. 6 - Prob. 16SQCh. 6 - Prob. 17SQCh. 6 - Prob. 18SQCh. 6 - Prob. 19SQCh. 6 - Prob. 20SQCh. 6 - Prob. 21SQCh. 6 - Prob. 22SQCh. 6 - Prob. 23SQCh. 6 - Prob. 24SQCh. 6 - Prob. 25SQ
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- * Pepsi Pizza 1. Refer to Figure# 1. Which point in the figure showing a consumer's budget constraint represents the consumer's income divided by the price of a Pepsi? a. Point Y b. Point V c. Point Z d. Point Xarrow_forwardQuestion 4 A consumer has income of $15,000. Pillows costs $35 per pillow, and soda costs $70 per bottle. Draw the consumer’s budget constraint (put pillow on the horizontal axis). What is the slope of this budget constraint? Suppose his income increases from $15,000 to $20,000. Illustrate what happens if both pillows and soda are normal goods. The price of pillows rises from $35 to $40 per pillow, while the price of sodas is unchanged. For a consumer with constant income of $15,000, show what happens to consumption of both goods (assume both goods are normal goods). Decompose the change into income and substitution effects. Under what circumstance(s) if any can an increase in the price of pillows induce a consumer to buy more of that good? Explain. Explain how a consumer should allocate expenditure in order to achieve maximum satisfaction and analyse how a rise in income might affect that allocation.arrow_forward(3). Full solution pleasearrow_forward
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