(a)
The budget constraint.
(a)
Explanation of Solution
Since the income is $4,000 and
Thus, the consumer will consume 80X.
Since the income is $4,000 and price of good Y is $100, the quantity of good Y can be calculated as follows:
Thus, the consumer will consume 40Y.
Now, the budget constraint can be represented as follows:
In Figure 1, the vertical axis measures the quantity of good Y and the horizontal axis measures the quantity of good X.
Budget constraints: Budget constraint refers to the possible combination of goods and services that a consumer can purchase at a given price level with the entire income.
(b)
The budget constraint.
(b)
Explanation of Solution
Since the income is $3,000 and price of good X is $25, the quantity of good X can be calculated as follows:
Thus, the consumer will consume 120X.
Since the income is $3,000 and price of good Y is $200, the quantity of good Y can be calculated as follows:
Thus, the consumer will consume 15Y.
Now, the budget constraint can be represented as follows:
In Figure 2, the vertical axis measures the quantity of good Y and the horizontal axis measures the quantity of good X.
Budget constraints: Budget constraint refers to the possible combination of goods and services that a consumer can purchase at a given price level with the entire income.
(c)
The budget constraint.
(c)
Explanation of Solution
Since the income is $2,000 and price of good X is $40, the quantity of good X can be calculated as follows:
Thus, the consumer will consume 50X.
Since the income is $2,000 and price of good Y is $150, the quantity of good Y can be calculated as follows:
Thus, the consumer will consume 13.33Y.
Now, the budget constraint can be represented as follows:
In Figure 3, the vertical axis measures the quantity of good Y and the horizontal axis measures the quantity of good X.
Budget constraints: Budget constraint refers to the possible combination of goods and services that a consumer can purchase at a given price level with the entire income.
Want to see more full solutions like this?
Chapter C Solutions
Aplia, 1 Term Printed Access Card For Arnold's Microeconomics, 13th
- Case Study: The Impact of Ebola on Tax Revenue in the DRC Background: The Democratic Republic of the Congo has experienced mulitiple outbreaks, with the 2018-2020 outbreak being one of the most severe. The outbreak had profound effects on public health, the economy and government operations. The DRC's economy already fragile due to policital instability and conflict, faced additional stain as the Ebola virus spread across several provinces. Economic disruption: The Ebola outbreak led to significant disruptions in the affected regions. Businesses were forced to close or reduce operations due to quarantine measures and the fear of contagion. this resulted in a sharp decline in economic activities, particularly in sectors such as agriculute, mining and trade. reduced consumer spending and interruptions in supply chains further exacerbated the economic downturn. Impact on Tax Revenue: the economic…arrow_forwardKey shortcomings of the Human Capital approach to measuring the monetary value of benefits of new treatments are that it Will generate lower benefits for male lives on average Will generate higher benefits for female lives on average Will tend to OVERVALUE improvements in quality of life Will tend to UNDERVALUE improved survival for people out of labour forcearrow_forwardOne of the key concepts in economics that underpins the necessity of making tough choices and confronting difficult tradeoffs through some form of collective decision-making is called Production Consumption Exchange Equity Scarcityarrow_forward
- Allocative efficiency WITHIN the health care sector refers to What mix of nonmedical and medical goods and services should be produced in the macro-economy What mix of medical goods and services should be produced in the health economy What specific health care resources should be used to produce the chosen medical goods and services Who should receive the medical goods and services that are producedarrow_forwardProduction efficiency is most concerned with Choice of inputs in production process Quantity of outputs resulting from the production process The technological process of production All of the abovearrow_forwardChoose all of the following that are assumed to be constant while constructing the production possibilities curve Technology Precise mix of inputs Institutional arrangements like judicial protection of business contracts Outputsarrow_forward
- A point that lies OUTSIDE of the PPC can be achieved if A major technological innovation increases production efficiency A sudden influx of resources e.g., massive immigration of trained nurses Economic reform resulting in greater protection of intellectual property rights All of the above Only options 1 and 2arrow_forwardThe marginal benefit from each successive unit of medical care consumed declines BECAUSE each successive unit is more expensive to produce True Falsearrow_forwardIn the Human Capital approach, estimated monetary worth of life is MOST SENSITIVE to which key indicator Discount rate Social security payroll taxes Labour market earnings Workplace injury compensationarrow_forward
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics Today and Tomorrow, Student EditionEconomicsISBN:9780078747663Author:McGraw-HillPublisher:Glencoe/McGraw-Hill School Pub Co
