Suppose Amanda spends all of her income of $1,000 on mascara (M) and chocolate (C) The prices per unit are PM = $5 and PC = $10. What is the maximum amount of chocolate that she can consume? a. 200 b. 5 c. 100 d. 1,000
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- Suppose John decides to buy 4 units of food and 4 units of clothing with his $12 budget. Would his marginal utility per dollar spent on food be greater than or less than his marginal utility per dollar spent on clothing? What does this tell you about how he should substitute food for clothing if he wanted to increase his utility without spending any more money?Raymond consumes meatloaves and pineapples. He has decided that hismonthly budget will be $1500. Suppose that one meatloaf costs $375, while one pineapple costs $150. Suppose Raymond decides to cut his monthly budget in half. Coincidentally, the next time he shops, he learns that meatloaves and pineapples are on sale for half price. Show what happens to Raymond’s budget line?Aria consumes only two goods, food and clothing. The marginal utility of the last dollar she spends on food is 12, and the marginal utility of the last dollar she spends on clothing is 9. The price of food is $1.20/unit, and the price of clothing is $0.90/unit. Is Aria maximizing her utility?
- How does a consumer’s optimal choice of goods change if all prices and the consumer’s income double?Becky needs to decide how many cups of coffee and pieces of cake she will buy for a meeting with an office mate. She estimates her total utility for different quantities of coffee and cakes below. A cup of coffee is $1.00, and each piece of cake is $0.50. Becky has a total of $3 to spend. What is Becky's total utility if she buys 1 cup of coffee and 4 pieces of cake? Cups of Coffee 1 2 3 4 5 6 Utility from Consumption Pieces of Cake 1 2 3 4 5 6 A B C D Total Utility from Cups of Coffee 33 56 79 Total Utility from Pieces of Cake 15 32 48 63 77 90 Total Utility of Different Consumption Bundles Consumption Bundle Cups of Coffee Pieces of Cake Total Utility 3 0 2 2 1 4 0 6Brenda wants to buy new car and has a budget of $25,000. She has just found a magazine that assigns each car an index for styling and an index for gas mileage. Each index runs from 1 to 10, with 10 representing either the most styling or best gas mileage. While looking at the list of cars, Brenda observes that on average, as the style index increases by one unit, the price of the car increases by $6,250. She also observed that as the gas-mileage index rises by one unit, the price of the car increases by $5,000. Illustrate the various combinations of style (S) and gas mileage (G) that Brenda could select with her $25,000 budget. Using the line drawing tool, illustrate Brenda's budget line. Label this line 'Budget Line'. Carefully follow the instructions above, and only draw the required object. Suppose Brenda's preferences are such that she always receives two times as much satisfaction from an extra unit of styling as she does from gas mileage. What type of car will Brenda choose?…
- Suppose a person allocates a given budget between food and clothing. If food is an inferior good can you tell whether clothing is inferior or normal? Explain.Jamani earns a weekly income of $6000. Suppose he wishes to spend this income on two goods, games and DVDs only. A game costs $200 while a DVDcosts $600. Draw Jamani’s budget line. Putting games on the Y axis. ii. Suppose his income increases to $9000 per week, illustrate what happens to her budget line.iii. Suppose the price of games increase to $600, while his income and the price of DVDs is unchanged from part (i).1. An individual's budget Suppose Darnell has a weekly budget of $32 to spend on ranch dressing and spinach. Ranch dressing is priced at $4 per bottle, and spinach is priced at $2 per container. If Darnell spends his entire $32 on ranch dressing, he can buy 16 containers of spinach. 8 bottles of ranch dressing. If he spends his entire $32 on spinach, he can buy Use the blue line (circle symbol) to plot Darnell's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the area that represents combinations of ranch dressing and spinach that are affordable for Darnell. Finally, place the black point (plus symbol) on the point on Darnell's budget constraint that corresponds to a scenario in which Darnell spends $16 on each good. Note: Dashed drop lines will automatically extend to both axes.
- Q1. You have Rs.10. The price of samosa is Rs.1 per unit. The price of a steak sandwich is Rs.3 The utility received from consuming samosa and steak is given below. a. How many samosas and steak sandwiches should be bought to maximize utility? Calculate utility maximizing quantities of samosas and steak sandwiches when income equals Rs.10 and the price of beer is Rs.1 and the price of steak sandwiches is Rs.3 using the utility b. maximizing rule No. of TU of samosa MU of No. of steaks TU of steaks MU of steaks samosas samosa 1 15 1 24 2 24 45 32 63 4 39 4 75 45 84 47 87How can one's choice of purchases/consumption be infuenced by utility or marginal utility?#16. Joanna is deciding between consuming Good X and Good Y. At her current level of consumption, her marginal utility per dollar for Good X is greater than the marginal utility per dollar for Good Y. To achieve the consumer optimum, Joanna needs to a. consume more of Good Y until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X. b. consume more of Good X until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X. c. consume more of both Good X and Good Y until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X. d. consume more of Good X or less of Good Y until the marginal utility per dollar for Good X and Good Y is equal. e. continue at her current level of consumption.
