Sam has two choices at Chick-fil-A, chicken sandwiches (on x-axis) and waffle fries (on y-axis). Each...

Sam has two choices at Chick-fil-A, chicken sandwiches (on x-axis) and waffle fries (on y-axis). Each chicken sandwich costs 3 dollars and each order of waffle fries costs 1.5 dollars. If the price of chicken sandwiches (good X) falls to 2 dollars,

		Sam’s budget constraint will shift to the right.
		Sam’s budget constraint will become flatter.
		Sam’s budget set will become smaller.
		Sam will be worse off.

Expert Solution

Sma's budget constraint will be : 3S + 1.5W = M where S is the number of sandwiches and W is the number of waffles consumed and M is given income level.

Now if price of sandwiches falls to 2 , the new budget constraint will be 2S + 1.5W = M . This will rotate the budget constraint , hinged at y axis, outward to the right , as consumer will be able to consume more of x now.

Now, Sam will not be worse off as he will be able to afford the bundles to the right of original budget constraint which were not affordable earlier.

His budget set will increase and not go smaller.

The budget constraint will become flatter as the slope reduces from 3/1.5 to 2/1.5.

And the budget constraint will not "shift" to the right it will "rotate at y axis " outward to the right.

Hence option b is correct.

Rahul Sunny answered 2 years ago

A rectangle has one side on the x-axis and two vertices on the curve y=2/(1+x^2) Find...

A rectangle has one side on the x-axis and two vertices on the curve y=2/(1+x^2) Find the vertices of the rectangle with maximum area. Enter your answer as a list of points (a, b) separated by semicolons. The order of the list does not matter.

Assume that you have two goods: beverage (y-axis) and food (x-axis), graphically illustrate the income and...

Assume that you have two goods: beverage (y-axis) and food (x-axis), graphically illustrate the income and substitution effects of a price decline in food for a normal good. Note a point on the new indifference curve (after the change) that could represent an inferior good and Giffen good respectively. What is a Giffen good and what are its implications?

Two identical particles, each of mass m, are located on the x axis at x=+x0 and...

Two identical particles, each of mass m, are located on the x axis at x=+x0 and x=-x0 a. Determine a formula for the gravitational field due to these two particles for points on the y axis; that is, write g⃗ g→ as a function of y, m, x0, and so on. Express your answers in terms of the variables y, m, x0, and appropriate constants. Enter your answers separated by a comma. b. At what point (or points) on the...

Two speakers, A and B, are at the same point on an x-axis and each emits...

Two speakers, A and B, are at the same point on an x-axis and each emits sound with a wavelength of 0.25 m. Speaker B's phase constant is 260 degrees larger than speaker A's phase constant and each produces an amplitude of 10 Pa. What amplitude occurs along the x-axis in front of these speakers (Pa)? b. What is the minimum distance you can move speaker A to achieve constructive interference along the x-axis? Give a positive answer regardless of...

Let X and Y be two independent random variables such that X + Y has the...

Let X and Y be two independent random variables such that X + Y has the same density as X. What is Y?

Two charges each +4 μC are on the x-axis, one at the origin and the other...

Two charges each +4 μC are on the x-axis, one at the origin and the other at x = 8 m. Find the electric field on the x-axis at: A) x = -2 m B) x = 2 m C) x = 6 m D) At what point on the x-axis is the electric field zero? E) Sketch Ex versus x

Given X + Y has a normal distribution, prove that X and Y each have a...

Given X + Y has a normal distribution, prove that X and Y each have a normal distribution if X and Y are iid random variables

Consider an individual making choices over two goods, x and y with prices px = 3...

Consider an individual making choices over two goods, x and y with prices px = 3 and py = 4, and who has the income I = 120 and her preferences can be represented by the utility function U(x,y) = (x^2)(y^2). Suppose the government imposes a sales tax of $1 per unit on good x: (a) Calculate the substitution effect and Income effect (on good x) after the price change. Also Illustrate on a graph. (b) Find the government tax...

Consider an individual making choices over two goods, x and y with prices px and py,...

Consider an individual making choices over two goods, x and y with prices px and py, with income I , and the utility function u(x,y) = xy1/2.You already know that this yields the demand functions x∗ = 2I 3px and y∗ = I 3py (no need to calculate). (a) Find the indirect utility function, expenditure function and the compensated (Hicksian) demands for x and y. Show your work. (b) Use your expenditure function to ﬁnd the compensating variation for a...

Consider an individual making choices over two goods, x and y with initial prices px= 2...

Consider an individual making choices over two goods, x and y with initial prices px= 2 and py= 1, with income I= 100: (a) If an individual has the utility function u(x;y) = 3x+y. what would the total, income and substitution effects of a price of x increase to 5? Show your work (b) If an individual has the utility function u(x;y) =x^2+y^2; what would the total, income and substitution effects of a price of x decrease to 0:50? Show...

Question