A consumer has 20 dollars. The price of x is 2, and the price of y 1. is 1. (a) Write down the budget constraint. (b) The consumer's income doubles, and the prices of x and y also double. Write down the new budget constraint and draw it. (c) The government subsidizes x by 1 dollar for each unit of sale and taxes on y by 1 dollar for each unit of sale. Write down the new budget constraint and draw it.

A consumer has 20 dollars. The price of x is 2, and the price of y 1. is 1. (a) Write down the budget constraint. (b) The consumer's income doubles, and the prices of x and y also double. Write down the new budget constraint and draw it. (c) The government subsidizes x by 1 dollar for each unit of sale and taxes on y by 1 dollar for each unit of sale. Write down the new budget constraint and draw it.

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 9SQ

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Wendy drinks 10 sugary drinks and 4 smoothies a week. Smoothies are $5 each and sugary drinks were $2 each. This week, things are different: the government has slapped a tax on sugary drinks and their price has doubled to $4. But it's not all bad news for Wendy. The government has also revised the income tax, so Wendy's drinks budget has increased. She can now just afford to buy her usual 10 sugary drinks and 4 smoothies a week.
Refer to the graph below for next two questions: Quantity of good Y 18- 16- 14- 12 10- 8- 6 4- 2- $80 and $140 0 2 4 6 8 10 12 14 16 18 20 Quantity of good X For Budget constraint 1, the price of good X and the price of good Y could equal $100 and $120 $140 and $80 Budget constraint 2 $120 and $100 -Budget constraint 1 respectively.
draw the budget constraint for a person with income of $ 1000 if the price of pepsi is $5 and the price of pizza is $10 what is the slop of their budget constraintope of their budget
a. Create a graph with X on the horizontal axis and Y on the vertical axis. The equation of the budget constraint is: 5X + 10Y = 500 We can rearrange this to solve for Y: Y = (500 - 5X)/10 b. Plot a graph with the point (50, 25), where they spend half their income on each good. c. If the household income doubles to Rs. 1,000, the new budget constraint would be: 5X + 10Y = 1000 Rearranging for Y: Y = (1000 - 5X)/10 d. If after the change the household spends Rs. 200 on Y and Rs. 800 on X, we can plug these values into the budget constraint to solve for X and Y: 5X + 10Y = 1000 5(800) + 10(200) = 1000 This equation is not satisfied, so we can conclude that the household cannot spend Rs. 800 on X and Rs. 200 on Y with the new budget constraint.
You have $100 to spend on food and clothing. The price of food is $4 and the price of clothing is $10. Graph your budget constraint. Suppose that the government subsidizes food such that each unit of food is half-price, up to the first 10 units of food. Graph your budget constraint in this circumstance. Will you and others be well-off from this subsidy? Use indifference curves on the old and new budget constraints to answer this.
1. (a) Which causes a shortage of a good--- a price ceiling or a price floor? Justify your answer with a graph. (b) What 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 constraint with soda on the vertical axis. What is the slope of this budget constraint?
Explain how the budget constraint might change if income and prices of all goods increased in same proportion?
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Problem 1: Suppose you have an income of $100 to spend on two goods. Good 1 costs $25 per unit. Good 2 costs $10 per unit. a) Write down your budget constraint. b) If you spend all your income on Good 1, how much can you buy? c) If you spend all your income on Good 2, how much can you buy? d) Graph your budget line. Please make sure your line passes through the appropriate points. Also, be sure to label the axes. I e) Suppose the price of Good 2 falls to $5 per unit. Draw the new budget line on the graph in Part d). f) Suppose your income falls to $75 to spend on the two goods, where the price of Good 1 is $25 and the price of Good 2 is $5 per unit. Draw the new budget line on the graph in part d). g) Highlight the area on your graph representing bundles you could afford in your budget equation from part a) that you cannot afford with the budget line in part f). h) Highlight the area on your graph representing bundles you can afford in your budget equation from part f) that you could…
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