Given the preceding graph and knowing the price of a latte is $4, Neha's available income for lattes and scones is $ Using the income amount you just computed, complete the following table by finding the price of a scone when BC, represents Neha's budget constraint and when BC2 represents her budget constraint. Then indicate the quantity of scones consumed in each of those scenarios. Price Consumption When Neha's budget constraint is... (Dollars per scone) (Scones) BC1 BC2

O 0 (2 18 8. Normal and inferior goods Megan likes going to the ballpark to watch baseball, and she also is fond of going to the theater to listen to the symphony orchestra. The following diagram shows two of Megan's indifference curves for going to ballgames and symphonies. With Megan's initial budget constraint (BC), she chose to go to five symphonies and three baseball games per month (point X). Then her budget constraint shifted to BC, and she chose to go to four symphonies and six ballgames per month (point Y), SEOTING 2 4 SYMPHONIES BC

pats >125 per week to spend on peanut butter and carrots in the fixed ratio of 1 pound of peanut butter to 4 pounds of carrots. Peanut butter costs $1 per pound and carrots cost $0.5 per pound Suppose the price of carrots were to rise from $05 to $1 per pound. By how much will Tom have to reduce his consumption of carrots

8. Fabian consumes X and Y and the following utility function represents his utility: U = 2XY a. With a utility function of U = 2XY, Fabian's MU, = 2Y and his MU, = 2x ,where MU is marginal utility. Write an equation for Fabian's marginal rate of substitution (MRS). b. Suppose Fabian's income is $120 and Px = S6 and Py-$2, where Px is the price of X and Py is the price of Y. Write an equation for Fabian's budget constraint. c. Write the equation that equates the slope of Fabian's budget constraint to the slope of Fabian's indifference curve: d. If Fabian is spending all of his income, how much X and how much Y will he choose? Use the equations you wrote in part's b and c to answer this question. e. What will Fabian's utility be with this combination of X and Y? f. Now suppose the price of X increases to P.=10. Write the equation that equates the slope of Fabian's budget constraint to the slope of Fabian's indifference curve. How will this change the optimal combination of X and Y? What…

Suppose Sam has a weekly budget of $48 to spend on juice and yogurt. Juice is priced at $4 per gallon, and yogurt is priced at $2 per container. gallons of juice. If he spends his entire $48 on yogurt, he can buy containers of If Sam spends his entire $48 on juice, he can buy yogurt. Use the blue line (circle symbol) to plot Sam's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the area that represents combinations of juice and yogurt that are affordable for Sam. Finally, place the black point (plus symbol) on the point on Sam's budget constraint that corresponds to a scenario in which Sam spends $24 on each good. Note: Dashed drop lines will automatically extend to both axes. ? 36 33 30 27 24 21 18 12 9 6 3 YOGURT (Containers) 0 0 + 3 6 9 12 15 18 21 JUICE (Gallons) 24 27 30 33 36 BC, ($48) 0 Affordable Region $24 on Each BC₂ ($60)

Question 4 Naomi's expenditure function defined for a month for two commodities, Cassava (Q₁) and Banana (Q₂) is given by: 1. 11. Where P₁ is the price of Cassava (P₁>0), P2 is the price of banana (P₂ >0) and U is the fixed utility. The income of Naomi is m, where m > 0. Derive the indirect utility function for Naomi (Hint: Use the duality conditions) Using the Shephard's Lemma condition, derive Naomi's Hicksian demand function for Cassava (Q₁). iii. H IV. [125P,PU3 8 Using the Roy's identity, derive Naomi's Marshallian demand function for Banana (Q₂). Using the answer in (i), evaluate Naomi's maximum utility level when the price per tuber of Cassava is 5 cedis, the price per finger of banana is 10 cedis and her income is 250 cedis.

John has $300 as income and he uses his income only for apples and bananas. If he uses his income only for apples, he can buy 10 pounds. If he uses his income only for bananas, he can buy 15 pounds. Which one is the correct formula for his budget constraint when X=pounds of apples, Y=pounds of bananas and the prices are per pound? a) More information is needed to answer the question. b) 15X + 10Y = 300 c) 10X + 15Y = 300 d) 20X + 30Y = 300 e) 30X + 20Y = 300