Individual and Market Demand - End of Chapter Problem Suppose that, holding prices constant, Alice has preferences over the number of books she purchases, illustrated in the accompanying table. a. In the diagram below, move the points to plot Alice's Engel curve for books. Income (thousands of dollars) 55 50 45 40 35 30 25 20 15 10 5 0 0 5 Alice's Engel Curve 15 20 Optimal number of books purchased 10 25 30 35 Income (thousands of dollars) 5 10 15 20 25 30 35 40 45 50 Optimal number of books purchased 5 6 20 25 26 10 9 8 7 6

Figure: Demand for Coconuts Price of coconuts E A D3 B D1 C D2 Quantity of coconuts Use Figure: Demand for Coconuts. If coconuts are a normal good and the income level of consumers falls, it will be represented in the figure as a: shift from D1 to D2 movement from point B to point C shift from D1 to D3 movement from point A to point

6. Part a and Part B

Which of the following equations correctly represents solving Q = 140 - 4P for P? O P 35-4Q O P = 140 - Q OP 140 - 4Q OP=35-1Q O P = 140+ Q Plot the relationship between P and Q on the following graph. Note: Price (P) is on the vertical axis and quantity (Q) is on the horizontal axis. PRICE 40 35 30 25 20 15 л 10 ?

quantity of bread 100 90 80 70 60 50 40 30 20 10 B 10 20 30 40 50 60 7080 quantity of apples Juan is a consumer of apples and bread. Juan shifts his consumption bundle from point B to point A. Which of the following is true? Juan's demand curve for apples shifted left and demand curve for bread shifted right. Juan's demand curve for both apples and bread shifted right. Juan's demand curve for apples shifted left and demand curve for bread shifted left. Juan's demand curve for apples shifted right and demand curve for bread shifted left.

Mario and Chris are the only two consumers in a particular market for train tickets. The following table displays the relationship between the price of bus tickets for each consumer and quantity of train tickets demanded per week when the price of train tickets is $4.00 each. $2.00 $3.00 $4.00 $5.00 Price of bus tickets Mario's demand for train tickets 8 6. 4 2 Chris' demand for train tickets 1 2 3 a) Suppose the price of bus tickets is $4. The market demand of train tickets per day is

please solve C by midpoint method  Suppose that the demand schedule for rice for a Saudi family is as follows:PriceQuantity DemandedOf Rice Per Month(income = SR 10,000)Quantity DemandedOf Rice Per Month(income = SR 15,000)SR 5          60       70SR 4          80       95SR 3        100      120SR 2        120      145SR 1        140      170a. Given the table above, draw the demand curve of rice using Excel.b. Show what will happen to your graph if this family like now less rice as they are eatingmore outside.c. Use the midpoint method to calculate the price elasticity of demand as the price of riceincreases from SR 4 to SR 5 if (i) family’s income is SR 10,000 and (ii) family’s income is SR15,000.

Problem 1 In the following scenarios, is the good described a normal good, an inferior good, or is there not enough information to say? Briefly justify your answer. a) Richard's income doubles and he goes from buying 4 apples per week to buying 5 apples per week. The prices of apples and any related goods do not change. b) Terri's income goes down by 50% and she goes from buying a bottle of tequila every week to buying one every month. At the same time, the price of tequila doubles. c) The price of potatoes goes up by 20% and Seamus buys 10% more potatoes. His income and the prices of related goods do not change. Hint: think about this one in the context of another topic you learned about this week.

5. Leila currently buys 6 trips using public transportation with a marginal utility of 2, and 4 trips using ride-share with a marginal utility of 8. Suppose that the price of a trip through public transport is 12 and the price of a trip through ride share is 56. Is Leila currently maximizing her utility? Explain why or why not. If not, what is the optimal action to improve her utility?

Refer to the graph below. Assume that the initial equilibrium in the market for bus rides is point A (30 rides per week). The price of bus rides increases and the equilibrium shifts to point B (20 rides per week). The income effect of the change in consumer behavior is the $ of other consumption 45 40 35 30 25 20 15 10 5 T T T T T T L B C A 5 10 15 20 25; 30 35 40 45 26 # of bus rides per week decrease of consumption by 4 decrease of consumption by 6 increase of consumption by 6