Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 7.A, Problem 1ADQ
Subpart (a):
To determine
The information embodied in a budget line.
Subpart (b):
To determine
The information embodied in a budget line.
Subpart (c):
To determine
The information embodied in a budget line.
Subpart (d):
To determine
The information embodied in a budget line.
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Principles of Economics 1 | S1 21/22
Time left 0:5)
When the price of one good increases and the price of the other good and income are held constant, the budget line
Select one:
shifts parallel to the original budget line so that the new budget line is farther from the origin
O b. shifts parallel to the original budget line so that the new budget line is closer to the origin
rotates so that the intercept is farther from the origin on the axis representing the good that has experienced
an increase in price
O a.
O c.
O d. rotates so that the intercept is closer to the origin on the axis representing the good that has experienced an
increase in price
Next page
Louis is trying to decide what combination of cups and plates to buy. His
budget is $12. Plates cost $4 each and cups cost $2 each. The numbers in
the table represent total utility. Given his budget, which combination will
maximize total utility? number of plates and cups.
Quantity Plates Utility from Plates
1
33
2
3
4
LO
5
6
64
93
103
112
123
Quantity Cups Utility from Cups
1
15
2
3
4
5
6
27
42
54
65
75
The graph of the budget line below has dollars on the vertical axis and food on the horizontal axis. Which statement is false?
D
100 Food
The vertical intercept represents all money available for purchasing.
The distance OA shows the amount of money spent on OD amount of food.
If the amount of money available is known in this graph, then the absolute and relative price of food is known also.
The horizontal intercept represents all the food the consumer could purchase with the budget available.
Chapter 7 Solutions
Microeconomics
Ch. 7.1 - Prob. 1QQCh. 7.1 - Prob. 2QQCh. 7.1 - Prob. 3QQCh. 7.1 - Prob. 4QQCh. 7.A - Prob. 1ADQCh. 7.A - Prob. 2ADQCh. 7.A - Prob. 3ADQCh. 7.A - Prob. 1ARQCh. 7.A - Prob. 2ARQCh. 7.A - Prob. 1AP
Ch. 7.A - Prob. 2APCh. 7.A - Prob. 3APCh. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - Prob. 3DQCh. 7 - Prob. 4DQCh. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - Prob. 8DQCh. 7 - Prob. 9DQCh. 7 - Prob. 10DQCh. 7 - Prob. 1RQCh. 7 - Prob. 2RQCh. 7 - Prob. 3RQCh. 7 - Prob. 4RQCh. 7 - Prob. 5RQCh. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7P
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- Suppose that with a budget of $100, Deborah spends $60 on sushi and $40 on bagels when sushi costs $2 per piece and bagels cost $2 per bagel. But then, after the price of bagels falls to $1 per bagel, she spends $50 on sushi and $50 on bagels. How many pieces of sushi and how many bagels did Deborah consume before the price change? At the new prices, how much money would it have cost Deborah to buy those same quantities (the ones that she consumed before the price change)? Given that it used to take Deborah’s entire $100 to buy those quantities, how big is the income effect caused by the reduction in the price of bagels?arrow_forward3. Suppose you won $15 on a lotto ticket at the local 7-Eleven and decided to spend all the winnings on candy bars and bags of peanuts. Candy bars cost $0.75 each while bags of peanuts cost $1.50 each. LO1.5 a. Construct a table showing the alternative combinations of the two products that are available. b. Plot the data in your table as a budget line in a graph. What is the slope of the budget line? What is the oppor- tunity cost of one more candy bar? Of one more bag ofarrow_forwardCathy has $240 to spend on cherry and/or coconuts. Suppose you have drawn her budget line for cherry and coconuts with cherry on the horizontal axis and coconuts on the vertical axis. If the price of coconuts increases by 20% and Cathy's income increases by 20%, but the price of cherry remains the same, then O the budget line shifts outward in a parallel fashion O the budget line shifts inward in a parallel fashion O the budget line becomes steeper O the budget line becomes flatter O none of the abovearrow_forward
- . Suppose that initially, bread is $2 per loaf,and cake is $2 per slice. Marie Antoinettehas $18 to spend on these items each week.At this income and those prices, Marie consumes 5 loaves of bread and 4 slices of cake.Then, the price of bread DECREASES to$1 per loaf. (The price of cake is still $2.)IF Marie’s budget had also fallen to $13so that she could still just afford her original bundle, she WOULD choose to spendthose $13 on 7 loaves of bread and 3 slicesof cake.But since Marie still has her original $18budget, she actually chooses to buy 4loaves of bread and 7 slices of cake afterthe price change.When the price of bread fell from $2 to $1,what was the substitution effect on Marie’sdemand for bread?arrow_forwardAnya is currently consuming $1000 worth of consumption goods C and spending 30 hours in leisure I per week, where her marginal rate of substitution is 20. Assume that the price of a consumption good C is $1. This implies that she is willing to: O a. sacrifice 20 hours of leisure to get an extra $1 worth of consumption. O b. sacrifice $20 worth of consumption to enjoy the next hour of leisure. O c. her current utility will be higher by $20 if she gets one more unit of leisure. O d. she values the next unit of consumption at $20.arrow_forwardWhen diminishing returns are present in consumption, the relationship between total utility and marginal utility is as follows: O Total utility increases at a decreasing rate while marginal utility decreases Total utility increases at an increasing rate while marginal utility increases Total utility increases at an increasing rate while marginal utility decreases Total utility decreases at a decreasing rate while marginal utility increasesarrow_forward
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