Microeconomics (7th Edition)
Microeconomics (7th Edition)
7th Edition
ISBN: 9780134737508
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 10.A, Problem 6PA

Subpart (a):

To determine

The indifference curve of perfect substitutes.

Subpart (b):

To determine

The indifference curve of perfect substitutes.

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Students have asked these similar questions
Suppose utility can be measured by "utils" and that Jim buys both coffee and bagels. The price of coffee is $2 and the price of a bagel is $3. If Jim is currently consuming coffee and bagels such that the marginal utility from the last cup of coffee consumed was 6 utils and the marginal utility from the last bagel consumed was 12 utils, is Jim maximizing utility? Why or why not? If not, what should Jim do? Explain in detail.
A consumer has a budget set aside for entertainment during the year, and they spend the budget on concerts and plays. The consumer has a strong preference for attending concerts over plays: the two activities are substitutes, but not very strong substitutes. Sketch the indifference curves for this consumer on a graph, with concert tickets on the vertical axis and play tickets on the horizontal axis. Briefly explain why the consumer might ultimately choose to purchase a large number of play tickets, even though they have a strong preference for concerts. Include a budget line on your graph to illustrate this case.
Bob consumes food and housing. Suppose his marginal utility from an additional unit of food is 20 and his marginal utility from an additional unit of housing is 180. Furthermore, suppose the price of a unit of food is $1.00 and the price of a unit of housing is $2.00. Can Bob increase his utility without changing his total expenditures on food and housing? Holding expenditures constant, A. Bob can increase utility by spending more on food and less on housing. B. Bob can increase utility by spending more on food and the same amount on housing. C. Bob can increase utility by spending less on food and more on housing. D. Bob cannot increase his utility. E. Bob can increase utility by spending more on food and more on housing.

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Microeconomics (7th Edition)

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