Principles of Economics (MindTap Course List)
8th Edition
ISBN: 9781305585126
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 21, Problem 1QR
To determine
The budget constraint of the consumer.
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Students have asked these similar questions
A consumer has income of $3,000. Wine costs $3 per glass, and cheese costs $6 per pound. Make a graph. Draw the consumer’s budget constraint with wine on the vertical axis. Make sure to label the axes.
A consumer has income of $3,000. Fresh Juice costs $3 per glass, and cheese costs $6 per pound.
(a) Draw the consumer's budget constraint (put cheese on the horizontal axis). What is the slope of this budget constraint?
(b) The price of cheese rises from $6 to $10 per pound, while the price of Fresh Juice remains $3 per glass. For a consumer with constant income of $3,000, show what happens to consumption of Fresh Juice and cheese (assuming both are normal goods). Decompose the change into income and substitution effects. Be sure to clearly mark all relevant information in your diagram.
Answer these all questions showing in the image.
Chapter 21 Solutions
Principles of Economics (MindTap Course List)
Ch. 21.1 - Prob. 1QQCh. 21.2 - Prob. 2QQCh. 21.3 - Prob. 3QQCh. 21.4 - Prob. 4QQCh. 21 - Prob. 1CQQCh. 21 - Prob. 2CQQCh. 21 - Prob. 3CQQCh. 21 - Prob. 4CQQCh. 21 - Prob. 5CQQCh. 21 - Prob. 6CQQ
Ch. 21 - Prob. 1QRCh. 21 - Prob. 2QRCh. 21 - Prob. 3QRCh. 21 - Prob. 4QRCh. 21 - Prob. 5QRCh. 21 - Prob. 6QRCh. 21 - Prob. 7QRCh. 21 - Prob. 1PACh. 21 - Prob. 2PACh. 21 - Prob. 3PACh. 21 - Prob. 4PACh. 21 - Prob. 5PACh. 21 - Prob. 6PACh. 21 - Prob. 7PACh. 21 - Prob. 8PACh. 21 - Prob. 9PACh. 21 - Prob. 10PACh. 21 - Prob. 11PACh. 21 - Prob. 12PA
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- Jessie is attempting to draw her budget constraint for purchasing cookies and strawberries. At a maximum, she could consume 500 strawberries; she labels this point on the vertical axis of her budget constraint. At a maximum, she could consume 200 cookies; she labels this point on her graph. If the price of a cookie is $0.50 and her budget is $100, what is the price of a strawberry?arrow_forwardWhat is a budget constraint? A consumer has an income of $3000. Soda costs $3 per liter and cheese costs $6 per pound. Draw the consumer's budget constriaint with soda on the vertical axis. What is the slope of the budget constraint?arrow_forwardMarie has a weekly budget of $24, which she likes to spend on magazines and pies. Calculate: a) If the price of a magazine is $4 each, what is the maximum number of magazines she could buy in a week? b) If the price of a pie is $12, what is the maximum number of pies she could buy in a week? c) Draw Marie’s budget constraint with pies on the horizontal axis and magazines on the vertical axis. What is the slope of the budget constraint? d) What is Marie’s opportunity cost of purchasing a pie? NOTE: To answer this question simply work your answer in a piece of paper, take a photo of it and upload the file. Remember that this is a problem solving question, hence you must show your work!arrow_forward
- draw a budget constraint and indifference curves for pizza and pepsi .show what happens to budget constraint and consumer's optimum when the price of pizza rises .in your diagram, decompose the change into an income effect and a substitution effectarrow_forwardIf 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.arrow_forwardQuestion No. 5| Hafidh's income is $200 a month. The price of watch is $25 a show, and the price of a Jeans is $15. a) Calculate the equation for Hafidh's budget line b) Draw a graph of Hafidh's budget line with the quantity of Watches on the x-axis. c) If Hafidh's income increased from $200 to 350$. Explain and show how Hafidh's budget line changes with watches on the x-axis.arrow_forward
- Suppose you have a budget of 30 to spend on two goods: pizzas and burgers. Each pizza is $5 while each burger is $10. Suppose you already purchased 6 pizzas. What is the maximum number of burgers that you can buy with the remaining funds in your budget?arrow_forwardThe budget set, or budget constraint, in the graph shows the possible combinations of brownies and ice cream cones that can be purchased. Assume that this person has a total of $18 to spend on brownies and ice cream cones. How much does a brownie cost? $ Assume that at point A, the marginal utility from a brownie is 10 and the marginal utility for an ice cream cone is 18. This person is utility maximizing. should consume more brownies and fewer ice cream cones. should consume more ice cream cones and fewer brownies. Brownies 18- 16- 14- 12- 10- 8- 6- 4 2. 0 1 2 3 1 A 1 + 4 5 Budget constraint 6 7 8 9 10 11 12 13 14 Ice cream conesarrow_forwardA consumer has income of 15000. Masks costs $35 per mask, and sanitizers cost $70 per bottle. Draw the comsumer's budget constraint ( put mask on the horizontal axis). what is the slope of this budget constraint?arrow_forward
- If a household has an income of $50 and buys only milk at $3 each unit and honey at $6 each unit, what is the household’s budget equation? Explain your answer.arrow_forwardPLEASE HELP ME ANSWER IT AS FAST AS YOU CAN Hanan consumes two fruits: bananas (B) and apples (A). She has decided that her monthly budget for fruit will be 25 KD. Suppose that one banana costs 0.25 KD (250 Fils), while one apple costs 0.10 KD (100 Fils). a. State Hanan’s budget constraint. b. Draw a graph of Hanan’s budget line. Place the number of units of bananas on the vertical axis and the number of units of apples on the horizontal axis. c. Show graphically how Hanan’s budget line changes under the following scenarios:i. If the price of apples increases to 0.20 KD (200 Fils).ii. If the price of bananas decreases to 0.05 KD (50 Fils). iii. If her income increases to 50 KD.iv. If Hanan decides to cut her monthly budget for fruit in half and notices that bananas and apples are on sale for half price.arrow_forwardPam has a monthly budget of £120 to be spent on T-shirts and trainers. She could afford to buy two T-shirts and two pairs of trainers. She could also buy eight T-shirts. In each case, she would be spending her entire monthly allowance. a) Calculate the price of a T-shirt and the price of a pair of trainers. Write down Pam'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 Pam's budget set would change if the price of a T-shirt doubles. Show the relevant changes graphically. How should Pam's income change so that she could still afford to buy two T-shirts and two pairs of trainers? c) Discuss how Pam's budget constraint would change if the government imposed a tax of £3 per each pair of trainers.arrow_forward
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