A consumer has two goods in his consumption bundle: bread and coffee. The current price of bread is $3.00 per loaf and the price of coffee is $6.00 per cup. (enter your response round to one or two decimal places as appropriate). What is the relative price of bread to coffee? (bread per unit of coffee)? Suppose that the price of bread increases by 10% and the price of coffee increases by 20% The relative price (bread per unit of coffee) has Based on the substitution effect, we would expect our consumer to buy relatively more bread, relatively more coffee or make no change to this consumption bundle?
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- Joe likes eating candy and drinking soda, The price of a bar of candy is $2 while the price of a can.of soda is $3. joe has a budeet of 529. Suppose that candy and soda can only be purchased and consumed as whole units (in other words it is impossible for Joe to purchase 1/3 of a bar of candy or A/5 of a can of soda). Furthermore, assume that it is impossible for Joe to spend more than his budget (that is, his total expenditure on candy and soda cannot exceed his budget). The following table describes the marginal benefit (expressed in $) he obtains from each bar of candy and can of soda Marginal Benefit from Marginal Benefit from Soda (in $) Unit Candy (in $) 180 180 160 150 3 140 120 60 5. 100 45 60 30 7. 40 15 8 10 -30 9. 60 -90 10 -100 -120 Joe's optimal consumption bundle includes (enter a numerical answer here) bars of candy and (enter o (enter a numerical answer here) cans of soda, and the total benefit he derives from the consumption of the optimal bundle is $ numerical answer…Joe's income is $100 a day and he currently buys two goods: fresh fruit (F) and cheese (C). The price of a unit of fresh fruit is $4 and the price of a unit of cheese is $5. (Assume that cheese is measured on the y-axis and fresh fruit is measured on the x-axis.) Which of the following statement is TRUE? Select one: If Joe spends all his income on cheese he can purchase 25 units of cheese Ob The opportunity cost of one unit of fresh fruit is 1.25 units of cheese Oc Joe would trade one fresh fruit for 0.8 unit of cheese Od. If Joe spends all his income on fresh fruit he can purchase 20 units of fresh fruitPaul consumes cheese and wine and his income is $200. Is it possible that when the price of one pound of cheese is $5 and the price of wine per glass is $5, Paul consumes 10 glasses of wine and 30 pounds of cheese per week, but when the price of one pound of cheese is $2 and the price of wine per glass is $10, Paul does not consume any cheese and spends all of his income on wine?
- Suppose that a consumer has $200 to spend on two goods: beer and pretzels. The price of beer is $6.00 and the price of pretzels is $3.00. What is the relative price of pretzels? $3.00 $6.00 1/2Question 34 Stephanos spends all of his $500 allowance on slices of pizza and gas for his pickup truck. He spends eighty percent of this on pizza and the rest on gas. Because of a shortage of gas, the price of gas increases by 40%. This makes his consumption of gas (measured in gallons) fall by 20%. If he keeps spending all his money on pizza and gas, what is the percentage change in his consumption of pizza (measured in slices)? does not change 2% increase 3% decrease 4% increase 1% decreaseJeffrey usually bought 10 kilos of glutinous rice and 5 bars of tablea every month, on a particular month, Jeffrey bought 12 kilos of glutinous rice and 8 bars of tablea determine the relationship of the two goods.
- Use the information below to answer the following questions. Fact 9.3.1 Marc has an income of $20 and spends it on two goods, root beer (measured on the vertical axis) and chips (measured on the horizontal axis). The price of root beer is $1 a can. The price of chips is $0.50 a bag. Initially, Marc chooses to consume 10 cans of root beer and 20 bags of chips. Then the price of root beer rises to $1.50 per can and the price of chips falls to $0.25 a bag. Refer to Fact 9.3.1. Mare's initial marginal rate of substitution was OA equal to 2 cans of root beer given up for each bag of chips gained. OB. equal to 10 cans of root beer given up for each bag of chips gained. OC not calculable with the information given. OD equal to 1 can of root beer given up for each bag of chips gained. OE. equal to 1/2 can of root beer given up for each bag of chips gained.please urgent EXERCISE 2 Ravi has £21 to spend on pastries and biscuits. If he spends all the money on pastries, he can afford 15 pastries. The slope of Ravi’s budget line (assuming his pastries consumption is measured on the horizontal axis and his biscuits consumption is measured on the vertical axis) is -3.5 (3.5 in absolute terms). a) Calculate the price of a pastry and the price of a biscuit. Write down Ravi’s budget equation and draw the corresponding budget line. Mark the consumption bundle 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 Ravi’s budget set would change if his budget doubles. Show the relevant changes graphically. How could the price of a pastry increase so that Ravi could still afford to buy 15 pastries? c) Discuss how Ravi’s budget constraint would change if the government imposed a tax of £0.50…For this problem, assume that Joe has $80 to spend on books and movies each month and that both goods must be purchased whole (no fractional units). Movies cost $8 each, and books cost $20 each. Joe’s preferences for movies and books are summarized by the following information: MOVIES BOOKS NO. PER MONTH TU MU MU/S NO. PER MONTH TU MU MU/S 1 50 — — 1 22 — — 2 80 — — 2 42 — — 3 100 — — 3 52 — — 4 110 — — 4 57 — — 5 116 — — 5 60 — — 6 121 — — 6 62 — — 7 123 — — 7 63 — — a. Fill in the figures for marginal utility and marginal utility per dollar for both movies and books. b. Are these preferences consistent with the law of diminishing marginal utility? Explain briefly. c. Given the budget of $80, what quantity of books and what quantity of movies will maximize Joe’s level of satisfaction? Explain briefly. d. Draw the budget…
- 32/ Assume that a consumer has a given budget or income of $24 and that she can buy only two goods, apples or bananas. The price of an apple is $3.00 and the price of a banana is $2.00. What is the slope of the budget line if the quantity of apples were measured on the horizontal axis and bananas on the vertical axis?If the consumer income is OR 928, price of good (X) is OR 58.6 and the price of good (Y) is OR 14, what is the quantity of good (Y) purchased by the consumer if he is only purchasing good (Y). a. 0.02 b. 66.29 c. 0.06 d. 15.84Suppose a consumer can afford to buy 6 units of good 1 and 8 units of good 2 if she spends her entire income. The prices of the two goods are Rs 6 and Rs 8 respectively. How much is the consumer’s income?