Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Question
Chapter 6.A, Problem 8SQ
To determine
The budget line of the consumer.
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Draw two axes: on the horizontal axis (x-axis), represent the quantity of good x, and on the vertical axis (y-axis), represent the quantity of good y. Plot the initial budget line. The equation for the budget line is m = px * x + py * y. You can rearrange it to solve for y: y = (m - px * x) / py. With given values for m, px, and py, you can plot the line that represents all combinations of goods x and y that the consumer can afford. Plot the indifference curves. These curves represent the combinations of goods x and y that give the consumer the same level of utility. Due to the complexity of the given utility function U(x, y) = xy / (x + y), it may be challenging to plot the exact indifference curves. As an alternative, you can use a simpler utility function for demonstration purposes, such as U(x, y) = x^a * y^b (where a and b are positive constants), which results in easier-to-plot curves. Locate the initial optimal consumption bundle, which is the point where the budget line is…
If the price of the good (X) is OR 17.7 and the price of the good (Y) is OR 6.5, what is the slope of budget line?
Select one:
a. -2.72
b. 115.05
c. -0.37
d. 2.72
Suppose that the price of Good X decreases. Which of the following will
happen to the budget constraint?
Select one:
a. It will become flatter.
b.
It will have the same slope but shift towards the origin.
c.
It will have the same slope but shift away from the origin.
d. It will be become steeper.
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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- given goods A and B and a budget, if the relative price of A were to increase, the budget line would: A. Shift out in parallel fashion. B. Shift in a relative fashion. C. Become steeper. D. Become flatterarrow_forwardAnswer fast...arrow_forwardExplain the meaning of a budget line? B. Explain the effect of the following on the budget line if money income (a) increases and (b) decreases? C. Explain the effect of the following on the budget line if the price of the product shown on the horizontal axis (c) increases and (d) decreases?arrow_forward
- If the price of good X increases, what will happen to the budget line? It will shift outward It will become steeper It will become flatter It will shift inwardarrow_forwardNonearrow_forwardJim's preferences are such that his utility is unchanged as long as he exchanges 2 muffins (good Y) for 1 coffee (good X). a. Write out Jim's utility function. b. Jim's budget constraint is 100 = 4x + 9y. Draw his budget line and solve for the slope of his budget line. Interpret your slope. Put Coffee (X) on the horizontal axis and Muffins (Y) on the vertical axis. c. If Jim's budget constraint is 100 = 9x + 4y instead, what is new slope and how does the interpretation of your slope changed.arrow_forward
- Draw a graph of Tarik’s budget line (bread on the y axis). Identify the intercept: Bread intercepts: Set S=0 in the budget constraint equation: So, the bread intercept is (0,40). Sausage intercept: Set B=0 in the budget constraint equation: So, the sausage intercept is (35, 0). Plot the Points: Plot the point (0, 40) on the y-axis. Plot the point (35, 0) on the x-axis. Draw a graph of Tarik’s budget line (bread on the y axis). Tarik consumes bread and sausages. He has decided that his monthly budgetwill be $1400. Suppose that one bread costs $35, while one sausage costs $40.i. What is the expression for Tarik’s budget constraint? Draw the graph for thisarrow_forwardRefer to the information provided in table below. a. If the price of a cinema ticket is 20 TL, the price of a concert ticket is 40 TL and the income is 120 TL, draw the budget line. b. Find marginal utility for each consumption level for both products and show your work in Table. c. Find the utility maximizing level of consumption bundle if the income of the consumer is 120 TL. Show the utility maximizing level of consumption for each product on the table. Explain your answer by stating the utility maximizing rule.arrow_forwardUsing a budget line, why does a decrease in the price of a good allow one to potentially consume more of both goods?arrow_forward
- a. What is your marginal rate of substitution of $1 bills for $5 bills? b. Produce an indifference curve graph for your preferences over these two goods. Make sure you label your graph very carefully and precisely.arrow_forwardPLEASE HELP ME ANSWER IT AS FAST AS YOU CAN Hanan consumes two fruits: bananas (B) and apples (A). She has decided that her monthly budget for fruit will be 25 KD. Suppose that one banana costs 0.25 KD (250 Fils), while one apple costs 0.10 KD (100 Fils). a. State Hanan’s budget constraint. b. Draw a graph of Hanan’s budget line. Place the number of units of bananas on the vertical axis and the number of units of apples on the horizontal axis. c. Show graphically how Hanan’s budget line changes under the following scenarios:i. If the price of apples increases to 0.20 KD (200 Fils).ii. If the price of bananas decreases to 0.05 KD (50 Fils). iii. If her income increases to 50 KD.iv. If Hanan decides to cut her monthly budget for fruit in half and notices that bananas and apples are on sale for half price.arrow_forwardSuppose 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?arrow_forward
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