Suppose that the price of oranges is $1 per unit and the price of pencils is $70 per unit. In addition, suppose that your income is $1900. If you spend all your money on oranges, how many oranges can you buy? 1900 oranges
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- Suppose that a consumer has an income of $10 per period, and that he must spend it all on meat or potatoes. If meat is $2.00 per pound and potatoes are $2.00 per pound, draw the consumer's budget line on a graph. identify the quantity of meat and potatoes that would be consumed.Suppose you go to Trader Joe's to buy fruit for the week. You only like apples (A) and bananas (B) and your weekly fruit budget is $11. When you arrive at Trader Joe's you notice that the price of an apple is $1.00 and the price of a banana is $0.25. QUESTION #1: How many apples and bananas should you buy? QUESTION #2: When you have found the answer, draw a diagram that shows the outcome. Step #1. Determine your preferences. Let's suppose that your preferences can be represented by the following utility function: U(A, B) = AªBB = A0.40 B0.60 FYI: This utility function is known as a Cobb-Douglas utility function. It is the most commonly used function used in economics! The reason we like it so much is that it has: 1. Constant returns (double your consumption of A and B and your utility doubles); a + B = 1 2. Diminishing marginal utility (the extra utility gained from consuming A (or B) decreases as you consume more of the A good (or B good); a 0.40); B > a. Step #2: Determine your…Suppose you go to Trader Joe's to buy fruit for the week. You only like apples (A) and bananas (B) and your weekly fruit budget is $11. When you arrive at Trader Joe's you notice that the price of an apple is $1.00 and the price of a banana is $0.25. QUESTION #1: How many apples and bananas should you buy? QUESTION #2: When you have found the answer, draw a diagram that shows the outcome. Step #1. Determine your preferences. Let's suppose that your preferences can be represented by the following utility function: U(A, B) = AªBß = A0.40 B0.60 FYI: This utility function is known as a Cobb-Douglas utility function. It is the most commonly used function used in economics! The reason we like it so much is that it has: 1. Constant returns (double your consumption of A and B and your utility doubles); a + B = 1 2. Diminishing marginal utility (the extra utility gained from consuming A (or B) decreases as you consume more of the A good (or B good); a 0.40); B > a. Step #2: Determine your…
- Assume that a college student spends her income on books and pizza. The price of a pizza is $8.00, and the price of a book is $15. If she has $100 of income, she could choose to consumeMarie has a weekly budget of $2400, which she likes to spend on magazines and pies. If the price of one magazine is $40, what is the maximum number of magazines she can buy in a week? If the price of a pie is $120, what is the maximum number of pies she can buy in a week? Compute and show Marie’s budget schedule for pies and magazines. Draw Marie’s budget line with pies on the horizontal axis and magazines on the vertical axis.Marie has a weekly budget of $24, which she likes to spend on magazines and pies. If the price of a magazine is $4 each, what is the maximum number of magazines she could buy in a week?
- Assume that a consumer has a given budget or income of $10 and that she can buy only two goods, apples or bananas. The price of an apple is $1.00 and the price of a banana is $0.50. If the consumer decides to buy 4 apples, how many bananas can she also buy with the remainder of her budget, assuming she exhausts her income? 12 bananas 5 bananas 8 bananas 15 bananasThe graph shows the budget line for a consumer who only buys cookies and magazines. If the consumer's income is $20, what is the price of a cookie? Cookies (number per week) 24 20 16 8 0 2 4 6 8 10 12 Magazines (number per week)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?
- Suppose you won $15 on a lotto ticket at the local 7-Eleven and decided to spend all the winnings on candy bars and bags of peanuts. The price of candy bars is $.75 and the price of peanuts is $1.50. Plot the data in your table as a budget line in a graph. What is the slope of the budget line? What is the opportunity cost of one more candy bar? Of one more bag of peanuts? Do these opportunity costs rise, fall, or remain constant as each additional unit of the product is purchased?The figure shows Laura's budget line. Laura buys only lilies (Y) and orchids (X). Lilies (number per month) 16- The price of a lily is $4 and the price of an orchid is $7. 14- Suppose Laura's income rises by $14 a month, the price of a lily increases by $6, and the price of an orchid remains the same. 12- What is the equation of Laura's new budget line? 10- ..... 8- The equation of Laura's new budget line is 6- O A. Y= 70- 3.0X O B. Y= 70 - 6.0X 4- O C. Y= 7-.7X 2- O D. Y= 7-1.43X Budget line 0- 10 Orchids (number per month)A consumer is currently purchasing three pairs of jeans and five T-shirts per year. The price of jeans is $30, and T-shirts cost $10. At the current rate of consumption, the marginal utility of jeans is 60, and the marginal utility of T-shirts is 30. Is this consumer maximizing his or her utility? Would you suggest that he buy more jeans and fewer T-shirts, or more T-shirts and fewer jeans?
