1. Assume the price of a unit of Good 1 (Kota) is R20 (y-axis). The price of a unit of Good 2(Pizza) is R5 (x-axis). The consumer's income is R100. a. Formulate the expression of the budget line and draw the budget line graph. b. Calculate the vertical intercept C. Suppose the price of Good 1 increases to R40, what happens to the budget line? (show on the graph) d. Suppose the price of Good 1 is still R20, but income increases to R300, what happens to the budget line? (show on the graph) 2. Which of the following is false? a. Movement along DD1 occurs when price changes b. Change in demand is shown by a shift of the demand curve DD1 to DD2 Price C. Shift from DD1 to DD2 can result from change in income and tastes of consumers d. Change in demand and quantity demanded are the same PA Pa D₂ D₁ d D₂ D₁ Qa Quantity 3. The elasticity of demand is 2.0. Is the demand curve relatively steep or flat? 4. Yesterday, the price of a box of rooibos tea was R30 a box, and Julie was willing to buy 10 boxes. Today, the price has gone up to R35 a box, and Julie is now willing to buy 9 boxes. Is Julie's demand for rooibos tea elastic or inelastic? What is Julie's elasticity of demand? 5. When the price of margarine increases a. Demand for butter increases b. Demand for margarine increases
1. Assume the price of a unit of Good 1 (Kota) is R20 (y-axis). The price of a unit of Good 2(Pizza) is R5 (x-axis). The consumer's income is R100. a. Formulate the expression of the budget line and draw the budget line graph. b. Calculate the vertical intercept C. Suppose the price of Good 1 increases to R40, what happens to the budget line? (show on the graph) d. Suppose the price of Good 1 is still R20, but income increases to R300, what happens to the budget line? (show on the graph) 2. Which of the following is false? a. Movement along DD1 occurs when price changes b. Change in demand is shown by a shift of the demand curve DD1 to DD2 Price C. Shift from DD1 to DD2 can result from change in income and tastes of consumers d. Change in demand and quantity demanded are the same PA Pa D₂ D₁ d D₂ D₁ Qa Quantity 3. The elasticity of demand is 2.0. Is the demand curve relatively steep or flat? 4. Yesterday, the price of a box of rooibos tea was R30 a box, and Julie was willing to buy 10 boxes. Today, the price has gone up to R35 a box, and Julie is now willing to buy 9 boxes. Is Julie's demand for rooibos tea elastic or inelastic? What is Julie's elasticity of demand? 5. When the price of margarine increases a. Demand for butter increases b. Demand for margarine increases
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:1. Assume the price of a unit of Good 1(Kota) is R20 (y-axis). The price of a unit of Good 2(Pizza) is R5
(x-axis). The consumer's income is R100.
a.
Formulate the expression of the budget line and draw the budget line graph.
b. Calculate the vertical intercept
C. Suppose the price of Good 1 increases to R40, what happens to the budget line? (show on the graph)
d. Suppose the price of Good 1 is still R20, but income increases to R300, what happens to the budget line?
(show on the graph)
2. Which of the following is false?
a.
Movement along DD1 occurs when price changes
b. Change in demand is shown by a shift of the demand curve DD1 to DD2
PA
C.
Shift from DD1 to DD2 can result from change in income and tastes of consumers
d. Change in demand and quantity demanded are the same
D₁
B
L
Pa
D₂
D₁
Q
Qa
Quantity
3. The elasticity of demand is 2.0. Is the demand curve relatively steep or flat?
4. Yesterday, the price of a box of rooibos tea was R30 a box, and Julie was willing to buy 10 boxes. Today, the
price has gone up to R35 a box, and Julie is now willing to buy 9 boxes. Is Julie's demand for rooibos tea elastic
or inelastic? What is Julie's elasticity of demand?
5. When the price of margarine increases
a. Demand for butter increases
b. Demand for margarine increases
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