Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Chapter 5.A, Problem 2TY
(a)
To determine
Construct an indifference curve and how many Tacos and Hot Dogs will be consumed when the income is $100.
(b)
To determine
Construct an indifference curve and how many Tacos and Hot Dogs will consume when the income is $150.
(c)
To determine
Construct an indifference curve and how many Tacos and Hot Dogs will be consumed when the price of Tacos increased to $3 from $2.
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Students have asked these similar questions
1. What is a normal good? Give a real world example of a good where
normality is not likely to be a reasonable assumption. Explain why the
example you have chosen is not likely to be a normal good.
Using the table below, fill in the quantity of Good X where the consumer will maximize his/her utility.
Assume the consumer only has $10.00 and Price of X is $1.00 each and the Price of Y is $1.00 each
Quantity of Good X
1
Quantity of Good Y
Marginal Utility of Y
Marginal Utility of X
150
140
125
2
120
130
90
80
70
60
50
40
30
3
4
6
A) 5
OB) 7
The consumer will maximize his/her utility by consuming.
C) 1
D) 3
120
110
F) 2
100
90
80
70
1
2
3
4
5
6
7
8
9
units of Good X.
Suppose that you are thinking about joining COSTCO. You must pay a membership fee, but once you joined you can buy products at a lower price. Assume you would buy only one good, say, paper towels at COSTCO. After careful consideration you think that you are indifferent between joining and not joining COSTCO. Illustrate your dilemma with a graph that includes two budget lines (with or without COSTCO) and an indifference curve. Make sure that you labelled the axes and all the shapes in your graph.
Chapter 5 Solutions
Economics: Principles & Policy
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