Store Opportunity Cost of Time Price of a Suit Total Cost (Dollars) (Dollars per suit) (Dollars) Local Department Store   129   Across Town   86   Neighboring City   63     Assume that Juanita takes opportunity costs and the price of the suit into consideration when she shops. Juanita will minimize the cost of the suit if she buys it from the    .

In the quaint village of Chromaville, all of the residents (including their mayor) are colorblind. The mayor is decorating all the village's lampposts before their annual year-end holiday parade. She has $180 to spend on ribbon. A yard of green ribbon costs $1.50 (per yard). A yard of red ribbon costs $1.25. However, there is a sale on this week: If you buy two yards of green ribbon at the regular price, you get an additional yard of green ribbon for free! a. If yards of red ribbon are measured along the horizontal axis and yards of green ribbon are measured along the vertical axis, what is the slope of the mayor's budget constraint (during the sale)? b. What is the slope of the mayor's indifference curves (if she cannot tell the difference between red and green ribbon)? C. How many yards of red and green ribbon will the mayor purchase (during the sale)?

Every month, a family of three spends $2,000 on food (F) and other items (O). The family’s preferences are represented by the utility function U(F,O) = F1/5O4/5. The unit price of food and the unit price of other items are both $1. Find this family’s monthly food expenditure.The family could join a consumers’ club. At the club, food costs 20% less than in other stores (i.e., at the food club PF = $0.8)

U.S. food markets consumers viewed beef as a normal good from 1960-1976, but viewed it as an inferior good after that point. This type of change is not abnormal, in that as average household incomes rise, preferences might change. For instance, as households move from poor to middle-class, their consumption of beef might increase. However, as households move from middle- class to upper-middle-class, they might choose to purchase more exotic foods products. Assuming you are a beef producer in 1983, what will happen if incomes continue to increase? a. The marginal cost of beef will increase. b. The marginal cost of beef will decrease. c. The demand for beef will increase. d. The demand for beef will decrease.

You have preferences u(x,y) = xy over games (X) and videos (Y) you can buy on a platform and a $360 budget, with prices px = 9 and py = 6. How much would you be willing to pay (at most) as a subscription fee for each of the following plans (you can buy any amount of Y in each plan at the original price, unless otherwise stated): (a) Plan A : You can buy (any amount of) X at a discounted price px = 4(b) Plan B : You are given 40 units of X for free, but you cannot buy any more of X. (surely can buy any amount of Y)(c) Plan C : You are given 30 units of X for free, but you cannot buy any more of X; you also have a discounted price for good Y; py = 4.

Kimberly has $1,000 per year to spend between $50 concert tickets and $200 per night getaways. Her utility maximizing combination is 8 concerts and 3 overnight getaways.    She recently received a promotion on her job and now she can spend up to $2000 per year on these two items. Her new utility maximizing combination will depend in part on what? Group of answer choices   The substitution effect.   The income effect.   The degree to which concerts and overnight getaways are normal goods or inferior goods.   The fact that concerts and getaways are fungible goods.

Consider the following money lotteries: ?1=(5/6,3000;1/6,500) ?2=(2/3,3000;1/3,500) ?3=(1/4,3000;1/4,2000;1/4,1000;1/4,500) ?4=(1/2,2000;1/2,1000) Leslie says that she is indifferent between lottery ?1 and getting $2000 for sure is indifferent between lottery ?2 and getting $1000 for sure prefers lottery ?3 over lottery ?4 Explain carefully whether or not Leslie is rational according to the theory of expected utility.

Fang likes playing badminton with her friends. Her utility function for playing badminton every week is given by       U(t) = 11t – 2t2, where t is measured in hours. They play on a badminton court, which they can rent per hour. Suppose the current price to play on the badminton court is £2.50 per hour. How many hours should Fang play if she wishes to maximise her utility? Explain what we mean by the principle of diminishing marginal utility. Does the principle apply in Fang’s case? Explain why. In a diagram with income in pound sterling on the horizontal axis and quantity on the vertical axis, show the relationship between Fang’s budget and the number of hours that would maximise her consumer surplus.

Dean likes to practice guitar in his apartment, working primarily on mastering old Velvet Underground songs. Because he’s sure that developing guitar prowess will lead to riches – or at least critical acclaim in indie circles – he derives $500 in surplus from being able to practice. Dean’s practicing, however, is quite loud and can be heard clearly through paper-thin walls in his hip Brooklyn apartment.  Britta lives next door and likes to read, but she is unable to do so when Dean plays guitar. She gets $350 in surplus from the satisfaction of reading. Suppose that when Dean and Britta bargain, they always split any surplus to be divided evenly. Assume that it’s common knowledge that courts always overestimate damages by $200, and transaction costs are $50. Given these assumptions, which of the following legal rules is most efficient:    Assuming the same information from Question 28 above, what would be the most efficient tax to levy on Dean’s playing?     A. $200   B.…