Question
In: Economics
Phineas receives $100 per week from his parents. He spends his entire income on two goods:...
Phineas receives $100 per week from his parents. He spends his entire income on two goods: Sprite (which cost $2 each) and chicken burgers (which cost $4 each). a) (8 points) Draw Phineas's budget constraint. Suppose that Phineas decides to purchase 20 Sprites and 20 chicken burgers this week. Is this choice within Phineas's opportunity set? Explain and show this choice on your graph. (Do not forget to label the axes of your graph)
b) (2 pts) What is the opportunity cost of purchasing a chicken burger?
c) (2 pts) If the opportunity cost of purchasing a chicken burger has decreased, which of the following would have increased: his income or the price of a chicken burger or the price of a Sprite?
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
Phineas receives $100 per week from his parents. He spends his entire income on two goods:...
Phineas receives $100 per week from his parents. He spends his
entire income on two goods: Sprite (which cost $2 each) and chicken
burgers (which cost $4 each). a) (8 points) Draw Phineas's budget
constraint. Suppose that Phineas decides to purchase 20 Sprites and
20 chicken burgers this week. Is this choice within Phineas's
opportunity set? Explain and show this choice on your graph. (Do
not forget to label the axes of your graph)
b) (2 pts) What is the...
IVAN RECEIVES AN ALLOWANCE OF 20$ A WEEK. HE SPENDS HIS ENTIRE ALLOWANCE ON TWO GOODS;...
IVAN RECEIVES AN ALLOWANCE OF 20$ A WEEK. HE SPENDS HIS ENTIRE
ALLOWANCE ON TWO GOODS; ICE CREAMCONES( WHICH COST 2$ EACH) AND
TICKETS TO THE MOVIES ( WHICH COST $10 EACH)
PLEASE CALCULATE THE APPORTUNITYCOST OF ONE MOVIE AND THE
OPPORTUNITY COST OF ONE ICE CREAM CONE.
PLEASE DRAW IVANS CONSUMPTION POSIBILITIES FRONTIER( BUDGET
CONSTRAINT)
WHAT WILL HAPPEN TO THE CONSUMPTION POSIBILITIES FRONTIER IF
IVANS ALLOWANCE CHANGE OR IF THE PRICE OF ICE CREAM CONES OR MOVIES
CHANGES?
WRITE...
Sudi spends his income on two goods. His income elasticity of demand for the first good...
Sudi spends his income on two goods. His income elasticity of
demand for the first good is ~1 = 0.2, while his income elasticity
of demand for the second good is ~ 1 = 2. Illustrate in one diagram
how a 10% increase in his income would affect the quantity he
demands of the two goods that shows an incomeconsumption curve, and
create another diagram for each of the two goods that shows an
Engel curve. How do the slopes...
A consumer spends all of his income only on two goods, X and Y. His utility...
A consumer spends all of his income only on two goods, X and Y.
His utility function is given by U=XY. The price of good X is $P
and the price of good Y is $2. His income is $400.
(4) Derive the PCC (price consumption curve) of this consumer as
the price of good X changes .
(3) Derive this consumer’s demand function for good X.
(3) As the price of good X falls, this consumer’s demand becomes
less...
A consumer spends all of his income only on two goods, X and Y. His utility...
A consumer spends all of his income only on two goods,
X and Y. His utility function is given by
U=XY. The price of good X is $P and the
price of good Y is $2. His income is $400.
Derive the PCC (price consumption curve) of this
consumer as the price of good X changes .
Derive this consumer’s demand function for good
X.
As the price of good X falls, this consumer’s demand becomes
less elastic. True or...
Suppose John has an income of $300 and spends his income to purchase two goods (X...
Suppose John has an income of $300 and spends his income to
purchase two goods (X and Y ). Price of Y is $5 and price of X is
$10. Furthermore, John always consumes 2 units of Y with 1 unit of
X. (a) How many units of X and Y should John consume in order to
maximize his utility? (b) Suppose that the price of X goes up to
$15 (income and price of Y are the same). How...
16. Suppose John has an income of $300 and spends his income to purchase two goods...
16. Suppose John has an income of $300 and spends his income to
purchase two goods (X and Y ). Price of Y is $5 and the price of X
is $10. Furthermore, John always consumes 2 units of Y with 1 unit
of X. (a) How many units of X and Y should John consume in order to
maximize his utility? (b) Suppose that the price of X goes up to
$15 (income and price of Y are the...
Suppose John has an income of $300 and spends his income to purchase two goods (X...
Suppose John has an income of $300 and spends his income to
purchase two goods (X and Y ). Price of Y is $5 and price of X is
$10. Furthermore, John always consumes 2 units of Y with 1 unit of
X. (a) How many units of X and Y should John consume in order to
maximize his utility? (b) Suppose that the price of X goes up to
$15 (income and price of Y are the same). How...
Pedro is a college student who receives a monthly stipend from his parents of $1,000. He...
Pedro is a college student who receives a monthly stipend from
his parents of $1,000. He uses this stipend to pay rent for housing
and to go to the movies (you can assume that all of Pedro’s other
expenses, such as food and clothing have already been paid for). In
the town where Pedro goes to college, each square foot of rental
housing costs $2 per month. The price of a movie ticket is $10 per
ticket. Let xdenote the...
A consumer spends his entire monthly income on x and y. The price of a unit...
A consumer spends his entire monthly income on x and y. The
price of a unit of x is $16 and the price of a unit of y is $12. If
he consumes the bundle (x, y) = (40, 30), his MRS x for y is 3/2,
meaning he would be indifferent to giving up 3 units of y to get 2
more units of x (or vice versa). Is this consumption plan optimal?
If not, does the plan consumer...
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