consumers view 100 quires of paper (each quire contains 25 sheets) and a bale of paper (each bale has 5,000 sheets) as perfect substitutes. Assume a quire and bale prices are $12 and $2,000, respectively, and consumer weekly budget is $4,000. Using a graphical analysis in a 2-dimensional commodity plane (i.e., draw indifference curves and a budget constraint), show how consumers identify an optimal bundle. Explain. Repeat the exercise in part (a), assuming a quire price is $6 (everything else is as before). Explain. Repeat the exercise in part (a), assuming a quire price is $25 (everything else is as before). Explain.
consumers view 100 quires of paper (each quire contains 25 sheets) and a bale of paper (each bale has 5,000 sheets) as perfect substitutes. Assume a quire and bale prices are $12 and $2,000, respectively, and consumer weekly budget is $4,000. Using a graphical analysis in a 2-dimensional commodity plane (i.e., draw indifference curves and a budget constraint), show how consumers identify an optimal bundle. Explain. Repeat the exercise in part (a), assuming a quire price is $6 (everything else is as before). Explain. Repeat the exercise in part (a), assuming a quire price is $25 (everything else is as before). Explain.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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consumers view 100 quires of paper (each quire contains 25 sheets) and a bale of paper (each bale has 5,000 sheets) as perfect substitutes. Assume a quire and bale prices are $12 and $2,000, respectively, and consumer weekly budget is $4,000.
Using a graphical analysis in a 2-dimensional commodity plane (i.e., draw indifference curves and a budget constraint), show how consumers identify an optimal bundle. Explain.
Repeat the exercise in part (a), assuming a quire price is $6 (everything else is as before). Explain.
Repeat the exercise in part (a), assuming a quire price is $25 (everything else is as before). Explain.
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