EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Question
Chapter 2, Problem 9RQ
To determine
To discuss the preference of consumer with the change in the price of electricity after a certain unit of consumption
Expert Solution & Answer
Explanation of Solution
Budget Constraint: It shows all the possible combination of two goods that a consumer can purchase, given the level of income of consumer and market prices.
The budget line rotates (inwards or outwards) with a change in the price of any of the two goods and the budget line shifts (inwards or outwards) with a change in the income of consumer.
On the consumption of the first 1,000 kilowatt units of electricity, the consumer is charged $0.10 per kilowatt.When the consumer consumes more than 1,000-kilowatt units, the consumer is charged $0.15 for each extra kilowatt.
This price change over 1,000 kilowatt makes use of electricity more expensive and makes the consumer budget line steeper after the consumption of 1,000 kilowatts of electricity.
This will change consumer preferences regarding consumption of electricity and consumer will try to consume up to 1,000 kilowatts to maximize his/her utility.
As shown in the below diagram the consumer is maximizing his utility at the consumption of 1,000 kilowatts of electricity.
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Students have asked these similar questions
in a real life, consumers do not sometimes satisfy their budget constraint
True or false. A budget constraint, budget line or budget set is a graphical way to illustrate all possible combinations of two goods that a person can afford.
This week you have gone to two parties. Assume the total utility you gained from these parties is 100 utils. Then you go to a third party, and your total utility rises to 110 utils. What is the marginal utility of the third party attended per week? Given the law of diminishing marginal utility, what will happen to total utility and marginal utility when you go to a fourth party this week?
Consider the table below which lists John's marginal utility schedule for steak and hamburger meals:
Steak meals per month
MU of steak meals
Price per steak meal
Hamburger meals per month
MU of hamburger meals
Price per hamburger meal
1
20
$10
1
15
$5
2
15
10
2
8
5
3
12
10
3
6
5
4
10
10
4
4
5
5
8
10
5
2
5
Given a budget of $45, how many steak and hamburger meals will James buy per month to maximize his total utility? What is the total utility realized?
Chapter 2 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 2.1 - Prob. 1TTACh. 2.1 - Prob. 2TTACh. 2.3 - Prob. 1MQCh. 2.3 - Prob. 2MQCh. 2.3 - Prob. 1TTACh. 2.3 - Prob. 2TTACh. 2.3 - Prob. 1.1MQCh. 2.3 - Prob. 2.1MQCh. 2.5 - Prob. 1TTACh. 2.5 - Prob. 2TTA
Ch. 2.7 - Prob. 1MQCh. 2.7 - Prob. 2MQCh. 2.7 - Prob. 3MQCh. 2.8 - Prob. 1MQCh. 2.8 - Prob. 2MQCh. 2.8 - Prob. 1.1MQCh. 2.8 - Prob. 2.1MQCh. 2 - Prob. 9RQCh. 2 - Prob. 2.1PCh. 2 - Prob. 2.2PCh. 2 - Prob. 2.3PCh. 2 - Prob. 2.4PCh. 2 - Prob. 2.5PCh. 2 - Prob. 2.6PCh. 2 - Prob. 2.7PCh. 2 - Prob. 2.8PCh. 2 - Prob. 2.9PCh. 2 - Prob. 2.10P
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Similar questions
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- Define Economic utilityarrow_forwardRaymond consumes meatloaves and pineapples. He has decided that his monthly budget will be $1500. Suppose that one meatloaf costs $375, while one pineapple costs $150. c. Show how Raymond’s budget line changes if the price of pineapples increases to $370. d.. Suppose Raymond decides to cut his monthly budget in half. Coincidentally, the next time he shops, he learns that meatloaves and pineapples are on sale for half price. Show what happens to Raymond’s budget line?arrow_forwardWhen the consumer buys 60 units of quantity of goods at a price of 3 per unit what would be the total expenditure!!!!arrow_forward
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