Economics: Principles and Policy (MindTap Course List)
13th Edition
ISBN: 9781305280595
Author: William J. Baumol, Alan S. Blinder
Publisher: Cengage Learning
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Question
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
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Check out a sample textbook solutionStudents 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 and Policy (MindTap Course List)
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- You are choosing between two goods, X and Y, and your marginal utility from each is shown in the following table. Units of X MUx Units of Y MUy 1 10 1 8 2 8 2 7 3 6 3 6 4 4 4 5 5 3 5 4 6 2 6 3 Instructions: Enter your answers as a whole number. a. If your income is $9 and the prices of X and Y are $2 and $1, respectively, what quantities of each will you purchase to maximize utility? 2 units of X and 5 units of Y b. What total utility will you realize? 48 utils c. Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase? 3 units of X and 3 units of Y d. Using the two prices and quantities for X, complete the table to derive the demand schedule (a table showing prices and quantities demanded) for X. Instructions: Start with the highest price first Price of X Quantity Demanded of X $ $arrow_forwardUtils 18 12 MU per S: Price = $2 Movies MU per $: Price = $3 Ⓒ 37 Utils 12 MU per $: Price = $1 Books In the figure to the above, suppose the price of movies increases from $3 to $6. The increase in price shifts the benefit curve (marginal utility per dollar) for movies . For the initial quantity of 6 movies, the marginal than the marginal utility per dollar of books. (Enter your utility per dollar becomes utils, which is response as a whole number.)arrow_forwardYou are choosing between two goods, X and Y, and your marginal utility from each is shown in the following table. Units of X MUX Units of Y MUY 1 10 1 8 2 8 2 7 3 6 3 6 4 4 4 5 5 3 6 2 5 6 4 3 Instructions: Enter your answers as a whole number. a. If your income is $18 and the prices of X and Y are $4 and $2, respectively, what quantities of each will you purchase to maximize utility? | units of X and units of Y b. What total utility will you realize? utils c. Assume that, other things remaining unchanged, the price of X falls to $2. What quantities of X and Y will you now purchase? | units of X and units of Y d. Using the two prices and quantities for X, complete the table to derive the derived demand schedule (a table showing prices and quantities demanded) for X. Instructions: Start with the highest price first. Quantity Price of X Demanded of X $ $arrow_forward
- If a good is free, when will a consumer stop wanting to buy the good? Once the total utility equals zero At the quantity where marginal utility is at its maximum Once the marginal utility equals zero When marginal utility is negative Once the marginal utility equals total utility What is used to measure a consumer's entire satisfaction or happiness of a choice? Total utility Marginal cost Marginal utility Total Revenue Total costs Which of the following best defines the term utility as it is used by economists? when a market allocates resources in a way that maximizes consumer and producer surplusarrow_forwardSuppose that strawberries sell for $3 per basket. Jim is considering whether to buy zero, one, two, three or four baskets. On your own, create a plausible set of total and marginal utility numbers for the different quantities of strawberries and arrange them in a table. From your table, calculate how many baskets Jim would buyarrow_forwardSuppose you have $12 to buy apples or oranges. The price of both apples and oranges is $2, and the marginal utility of buying apples or oranges is shown in the following table: a. In equilibrium, how many apples and oranges would you buy? b. Please speculate and draw the demand curve for apples or oranges (Note: the demand curve depicts the function of price and quantity demanded).arrow_forward
- In the following graph the price of Y is $15. What does the curve in the second graph show? Y 40 Units of good Y 3 10 Fice of good X (dollars) Nº 30 X₂ 25 Quantity of good X Multiple Choice 5 40 how a consumers utility-maximizing choices of Xand Ychange when the budget constraint changes how a consumers preferences change when Income changes how a consumers utility-maximizing choices of Xchanges when the price of Xchanges how a consumers utility-maximizing choices of Ychanges when the price of Y' changes both how a consumer's utility-maximizing choices of Xchanges when the price of Xchanges "and "how a consumer's utility-maximizing choices of Y changes when the price of Y changes".arrow_forwardWhich of the following choices best explains how marginal utility causes the average person to eat more food at a buffet than at an a la carte menu where you pay for each item that you want? A. Spending money on food has a very low marginal utility, so customers at a la carte restaurants will generally only buy the cheapest options (which taste worse), causing them to eat less. B. A consumer will eat until the next serving's benefit is less than its cost. At an a la carte restaurant, a consumer will stop ordering even when the marginal utility of the next serving is positive. At an all-you- can-eat buffet, the next serving always costs zero. Therefore, a consumer won't stop until the next bite provides negative marginal utility. C. People go to buffets because they want to eat more. Thus, the customers at buffets are more inclined to eat more food. Marginal utility does not play a factor in how much they eat. incorrect D. Because consumers choose their own portion sizes at a buffet,…arrow_forwardYou are choosing between two goods, X and Y, and your marginal utility from each is as shown below. Units of X MUX Units of Y MUy 10 8. 2 2 7 3 4 4 4 4 6. 6 Instructions: Enter your answers as whole numbers. a. If your income is $18.00 and the prices of X and Y are $4.00 and $2.00, respectively, what quantities of each will you purchase to maximize utility? X = units. Y =O units. b. What total utility will you realize? c. Assume that, other things remaining unchanged, the price of X falls to $2.00. What quantities of X and Y will you now purchase? units. X =O units. Y = d. Using the two prices and quantities for X, derive a demand schedule (a table showing prices and quantities demanded) for X. Instructions: Start with the highest price first. Quantity Price Demandedarrow_forward
- Tom has 500 dollars to spend on two goods, good 1 and good 2. The seller of good 1 offers Tom the following deal: For every three units (of good 1) you buy, you will get the fourth unit for free. Determine how many units of good 1 Tom will end up with if the price of good 1 is 3, the price of good 2 is 8, Tom spends all his income on the two goods and buys 9 units of good 2. Then enter the value below.arrow_forwardYou are choosing between two goods, X and Y, and your marginal utility from each is shown in the following table. Units of X MUX Units of Y MU 1 20 16 14 16 3. 12 3. 12 4 8. 4. 10 6. 4. 8. 6. 6. Instructions: Enter your answers as a whole number. a. If your income is $18.00 and the prices of X and Y are $4.00 and $2.00, respectively, what quantities of each will you purchase to maximize utility? units of X and units of Y b. What total utility will you realize? utilsarrow_forwardProblem 1 In the following scenarios, is the good described a normal good, an inferior good, or is there not enough information to say? Briefly justify your answer. a) Richard's income doubles and he goes from buying 4 apples per week to buying 5 apples per week. The prices of apples and any related goods do not change. b) Terri's income goes down by 50% and she goes from buying a bottle of tequila every week to buying one every month. At the same time, the price of tequila doubles. c) The price of potatoes goes up by 20% and Seamus buys 10% more potatoes. His income and the prices of related goods do not change. Hint: think about this one in the context of another topic you learned about this week.arrow_forward
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