ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- A consumer has an annual budget constraint for two goods: “housing sq. ft." and "$ for everything else". Draw the budget constraint for this consumer if income (v) = $50,000 and price per sq. ft. of housing, ph, is S200. Please be sure to fully label your graph (i.e., slope, intercept, etc.). Note: plot "housing sq. ft." on the x-axis. How would this consumer's budget line change if she received a $5,000 raise and the price of housing increased to $250? Include a graph with your answer. How did the economic rate of substitution (ERS) between housing and $ for everything else change when pa changed? Please interpret the ERS both before and after the price change.arrow_forwardQuestion 6 Burritos 9 8 7 6 5 4 3 2 1 1 3 4 5 6 7 Assume Kerri's budget constraint is represented in the graph shown. If Kerri's income to spend on these two items increases, her budget constraint will: shift in, maintaining the same slope. shift out and become flatter. shift out and become steeper. shift out, maintaining the same slope. OOOO Salads 2arrow_forwardApples (pounds per week) 0 A> B B> D b d Butter (pounds per week) he graph above indicates that a consumer's preference combination. Which one of the following is correct based on the graph? C> B C E>F E F Barrow_forward
- sketch a person’s indifference map and budget line for two goods, X on the horizontal axis and Y on the vertical axis. Mark the optimum consumption point. Now illustrate the following (you might need to draw a separate diagram for each): (a) A rise in the price of good X (a normal good), but no change in the price of good Y. (b) A shift in the person’s tastes from good Y to good X. (c) A fall in the person’s income and a fall in the price of good Y, with the result that the consumption of Y remains constant (but that of X falls).arrow_forwardAlex distributes his monthly income of $600 between two goods, movies and food. By spending his entire income on movies, he can enjoy a maximum of 20 movies. On the other hand, by spending his entire income on food he can consume a total of 60 units of food. Assume that food consumption is measured along the horizontal axis and the consumption of movies is measured on the vertical axis. Calculate the slope of Alex's budget line when the price of food increases to $20 while the price of movie remains unchanged. -2/3 - 1.5 -2 -3/4arrow_forwardpats >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 carrotsarrow_forward
- QUESTION 7 Assume the following is the budget equation for Courtney who spends her income between music concerts and movies: 86 Music Concerts + 85 Movies = 7216 If Music Concerts are measured on the vertical axis, what would be the slope of the budget line ? 2arrow_forwardBrian spends his entire monthly income of $1200 on shoes (S) and pizzas (P). The price of a pair of shoes is $60, and the price of a pizza is $20. If he consumes 10 pairs of shoes and 30 pizzas, his MRS is 2P/1S. (A quantity of shoes is measured along the x-axis, and a quantity of pizza is measured along the y-axis.) His choice is optimal. True Falsearrow_forwardQuestions 6 (Demand). When the price of x1 is $8 and the price of x2 is $5, Jenny consumes 20 units of x1 and 10 units of x2. Suppose that when the price of xX2 increases to $7, Jenny consumes 25 units of x1. a) What type of goods are x1 and x2? b) How many units of x2 does Jenny consume after its price increases? Hint: Calculate her income with the first allocation of goods. Questions 7 (Slutsky Equation and Consumer Surplus). Robert's utility function for x and xa is:arrow_forward
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