Question

In: Economics

Bernie Sanders, who has ordinary-shaped (convex) indifference curves, spends his income on prune juice and all...

Bernie Sanders, who has ordinary-shaped (convex) indifference curves, spends his income on prune juice and all other goods. He buys 10 gallons of prune juice each month. Even when the price of prune juice doubles, Bernie continues to purchase exactly 10 gallons.

1. True, false, or uncertain: Prune juice is a normal good for Bernie. You must include both verbal and graphical analysis in your response.

Solutions

Expert Solution

This statement is false. Prune juice is not a normal good in this case.

Rahul Sunny answered 1 year ago
Next > < Previous

Related Solutions

Suppose that Joey has classical bow-shaped indifference curves (convex) that do not intersect the axes for...
Suppose that Joey has classical bow-shaped indifference curves (convex) that do not intersect the axes for two goods X and Y. Draw an indifference curve and a budget line for Joey showing an equilibrium consumption bundle and label it A. Assume that the price of good Y increases. Carefully sketch out the change in the equilibrium bundle, indicating the income and substitution effects, assuming that: Y is a normal good. Y is an inferior good, but not a Giffen good....
Senator Bernie Sanders has introduced a “Medicare for all” bill in the U.S. Senate. Under his...
Senator Bernie Sanders has introduced a “Medicare for all” bill in the U.S. Senate. Under his plan, government would pay 100% of the healthcare of all citizens in the U.S. This would effectively reduce the out-of-pocket price that people pay to zero. How would this plan differ from the current structure of Medicare? How would the Sanders bill create a “moral hazard” and affect the way people behave in the market for medical care services if it was passed by...
Rosaline consumes only turkey sandwiches and juice and she spends all her income on turkey sandwiches...
Rosaline consumes only turkey sandwiches and juice and she spends all her income on turkey sandwiches and juice. The marginal utility of her last turkey sandwich consumed is 200 utils and the marginal utility of her last juice consumed is 100 utils. The price of a turkey sandwich is $4 and the price of juice is $3 . 1. Is Rosaline maximizing her level of utility? Justify. 2. Should Rosaline consume less or more turkey sandwiches to reach equilibrium? Justify....
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...
(a) Haris spends all of his income on apples and oranges. He thinks that apples and...
(a) Haris spends all of his income on apples and oranges. He thinks that apples and oranges are perfect substitutes; one apple is just as good as one orange. Apples cost $4 a unit and oranges cost $5 a unit. His income is given by $120 per month. If the price of apples increases to $6 a unit, calculate the (i) Slutsky substitution (ii) Income and (iii) the total effect of a price decrease on the consumption of apples. (b)...
a) Consider a Cobb-Douglas consumer who always spends ? = 25% of his income on good...
a) Consider a Cobb-Douglas consumer who always spends ? = 25% of his income on good x. Write down two bundles (any two you want) that lie on the same indifference curve. b) Explain to me why two distinct indifference curves can never intersect, unless they are the same curve. c)In the space below, make up a utility function that is not homogeneous. d) Suppose the indifference curves of a perfect substitutes agent have a slope of -9/7. Good x...
John Q. Public spends all of his income on CDs and hamburgers. Draw his budget constraint...
John Q. Public spends all of his income on CDs and hamburgers. Draw his budget constraint for these products when the following are true: 1) Graph A: his income is $80, the cost of a CD is $2 and a cost of a burger is $2. 2) Graph B: his income is $120, the cost of a CD is $2 and the cost of a burger is $2. 3) Graph C: his income is $80, the cost of a CD...
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...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT