Sam is in equilibrium and is spending his income where the marginal utility of shoes is 20 units and pants is 30 units. The unit price of shoes is $5. The price of pants is: a. 6 b. 7.5 c. 4 d. 5
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Sam is in equilibrium and is spending his income where the
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7.5
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- Peter consumes only chocolate ice cream and vanilla ice cream. He is spending all of his income. His marginal utility of chocolate is 200 and his marginal utility of vanilla is 200, and the price of chocolate is $1.00 per scoop and the price of vanilla is $2.00 per scoop. To maximize his utility, Peter shouldJamani earns a weekly income of $6000. Suppose he wishes to spend this income on two goods, games and DVDs only. A game costs $200 while a DVDcosts $600. Draw Jamani’s budget line. Putting games on the Y axis. ii. Suppose his income increases to $9000 per week, illustrate what happens to her budget line.iii. Suppose the price of games increase to $600, while his income and the price of DVDs is unchanged from part (i).Alex wants to maximize his utility. At his current level of consumption, Alex's marginal utility from an aditional cup of coffe is 15 utils, and his marginal utility from an additional can of soda is 11 utils. If the price of a cup of coffee is $3 and the price of a can of soda is 32. Alex Should:
- EXERCISE 3 If Joe decides to allocate his entire weekly allowance between energy drinks and coffee, he could afford 9 energy drinks and 3 cups of coffee, or 6 cups of coffee and 2 energy drinks. Suppose a cup of coffee costs £2.80. Calculate the price of an energy drink and Joe’s weekly allowance. Write down Joe’s budget equation and draw the corresponding budget line. Mark the two consumption bundles mentioned above. In your graph, clearly label the axes, the budget line, and calculate the coordinates of the points of intersection of the budget line with each axis. Interpret each of those points. Discuss how Joe’s budget set would change if his allowance was reduced by £5.20 a week. Show the relevant changes graphically. How should the price of coffee change so that Joe could still afford to buy 6 cups of coffee and 2 energy drinks? Discuss how Joe’s budget constraint would change if the government subsidised consumption of coffee by £0.50 per cup of coffee.Aria consumes only two goods, food and clothing. The marginal utility of the last dollar she spends on food is 12, and the marginal utility of the last dollar she spends on clothing is 9. The price of food is $1.20/unit, and the price of clothing is $0.90/unit. Is Aria maximizing her utility?Ray buys only hamburgers and bottles of root beer out of a weekly income of $100. He currently consumes 20 bottles of root beer per week, and his marginal utility of root beer is 6. The price of root beer is $2 per bottle. Currently, he also consumes 15 hamburgers per week, and his marginal utility of a hamburger is 8. Is Ray maximizing utility at his current consumption basket? If not, should he buy more hamburgers each week, or fewer?
- Q1. You have Rs.10. The price of samosa is Rs.1 per unit. The price of a steak sandwich is Rs.3 The utility received from consuming samosa and steak is given below. a. How many samosas and steak sandwiches should be bought to maximize utility? Calculate utility maximizing quantities of samosas and steak sandwiches when income equals Rs.10 and the price of beer is Rs.1 and the price of steak sandwiches is Rs.3 using the utility b. maximizing rule No. of TU of samosa MU of No. of steaks TU of steaks MU of steaks samosas samosa 1 15 1 24 2 24 45 32 63 4 39 4 75 45 84 47 87If Joe decides to allocate his entire weekly allowance between energy drinks and coffee, he could afford 9 energy drinks and 3 cups of coffee, or 6 cups of coffee and 2 energy drinks. Suppose a cup of coffee costs £2.80. a) Calculate the price of an energy drink and Joe's weekly allowance. Write down Joe's budget equation and draw the corresponding budget line. Mark the two consumption bundles mentioned above. In your graph, clearly label the axes, the budget line, and calculate the coordinates of the points of intersection of the budget line with each axis. Interpret each of those points. b) Discuss how Joe's budget set would change if his allowance was reduced by £5.20 a week. Show the relevant changes graphically. How should the price of coffee change so that Joe could still afford to buy 6 cups of coffee and 2 energy drinks? c) Discuss how Joe's budget constraint would change if the government subsidised consumption of coffee by £0.50 per cup of coffee.1. Arya has an income of $150 per month. She spends on two goods: Burgers and Colas. The price of a burger is $5 and the price of a cola is $2. a. Using the information above, derive Arya's budget line equation with the quantity of cola on the left side. b. Arya's utility is maximized when 20 burgers and 40 colas are consumed. Draw an indifference curve along with your budget line (with quantity of burgers on the x-axis) to show Arya's best affordable point. c. Suppose, income falls from $150 to $100. Show how your graph in part (b) will change? d. Suppose, price of burger rises from $5 to $10. Show how your graph in part (b) will change?
- Kim has $40 per week in her entertainment budget. She splits her time between going to the movies and yoga classes. Each movie costs $10 while each yoga class costs $5. a. Graph Kim’s budget constraint, with movies on the x-axis and yoga on the y-axis. What is the value of the x-intercept? What is the value of the y-intercept? What is the slope of this budget constraint? Suppose the total utility from each of these activities is listed in the table below. What is Kim's utility maximizing point? Movies Total Utility Yoga Classes Total Utility 0 0 0 0 1 40 1 30 2 70 2 55 3 90 3 75 4 95 4 90 5 100 5 100 6 105 6 105 movies and yoga classes How much total utility does she obtain from this combination? c. Suppose the price of movies drops to $5 each. What is her new optimal consumption choice? The new slope of her budget constraint is? Kim will choose to consume how many movies and how many yoga…Question 16 The following graph illustrates Tom's preferences for pizza slices and tacos in a given week: Figure 3-1 Quantity of Pizza Slices 20 10 18 17 16- 10 12 14 16 18 20 Quantity ofTacos Refer to Figure 3-1. Assume that Tom has an income of $100 per week, the price of a slice of pizza is $5, and the price of a taco is also $5. If Tom optimizes his purchases, he will choose to purchase which bundle of pizza slices and tacos? (Hint, consider which budget constraint Tom is on.) O A OB OC O O 111111000 14 IGN=. Kawther’s income is OMR12 a week. The price of small-sized pizza is OMR3, and the price of a fresh juice is OMR3. Calculate the equation for Kawther’s budget line and illustrate all options on the table. Draw a graph of Kawther’s budget line with the quantity of fresh juice on the x-axis. Kawther’s income is OMR12 a week. The price of small-sized pizza rises from OMR3 to OMR6, and the price of a fresh juice is unchanged at OMR3. Explain how Kawther’s budget line changes with fresh juice on the x-axis.
