Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Chapter 6.A, Problem 3SQP
(a):
To determine
The indifference curve and also label the points A–D.
(b):
To determine
The budget line of the consumer.
(c):
To determine
The combination that the consumer would consume with an income of $12.
(d):
To determine
The value of the MRS and the slope of the budget line at equilibrium.
(e):
To determine
The
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Assume that the data in the following table are an indifference curve for a consumer:
a. graph this indifference curve and label "Quantity of Y" on the vertical axis and Quantity of X" on the horizontal axis. Label the points A-D.
b. Assume the consumer's budget is $12 and the price of X and Y are $1.00 and $1.50, respectively. Draw the budget line in the above graph.
c. what combination of X and Y will the consumer purchase?
d. What is the value of the MRS and the slope (Px/Py) at consumer equilibrium?
e. Beginning with the graph drawn in part (a), explain and draw graphs to derive demand curve for X
Choice
units y
units of x
A
10
2
B
6
4
C
4
6
D
2
12
Draw YOUR indifference curve for the consumption of two goods (you pick the goods – be creative!) Make sure to include labels.
Why did you choose these two goods? Why do you view these as being a tradeoff?
Carefully explain why the indifference curve has the shape you created. (Hint: Discuss the slope. What it means and how it changes)
Determine a budget that will be allocated towards your consumption of these two goods. Given the budget, prices for the goods, and your preferences, how will you find the utility-maximizing combination? Give an intuitive answer as well as a graphical answer (make sure to label the graph accordingly).
1. Paul derives utility from cups of coffee (C) and donuts, which he eats a dozen at a time
(D). His utility function is:
U = √C.D
a. Sketch Paul's indifference curves for U-5, U-10, and U=20.
b. Suppose Paul has $200 to spend and that a cup of coffee costs $5 and a dozen donuts
costs $20. Draw Paul's budget constraint on the same graph as his indifference curves.
c. Suppose Paul spends all of his income on donuts. How many dozen can he buy and what
is his utility?
d. Show that Paul's income will not permit him to reach the =20 indifference curve.
f.
e. If Paul buys five dozen donuts, how many cups of coffee can he buy? What is his utility?
Use a carefully drawn graph to show that the utility calculated in part e is the highest Paul
can achieve with his $200.
Chapter 6 Solutions
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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