Professor Girante says that the way we make choices about what to buy depends on how our dreams and wants meet reality. Our dreams and wants are represented by our preferences, and reality is represented by our budget constraint.
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The correct answer is D. Our dreams and wants are represented by our indifference curves, which show the combinations of goods that give us the same level of satisfaction. Reality is represented by our budget constraint, which shows the combinations of goods that Show more…
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a. A consumer has an income of $3,000. Soft Drink costs $3 per glass, and cheese costs $6 per pound. b. Write an equation for the budget constraint. c. Draw the consumer's budget line. What is the slope of this budget line? d. Show what happens to the budget line if the consumer's income increases to $6,000 and the prices remain unchanged. What happened to the slope? Explain. e. Show what happens to the budget line if the price of Soft Drink increases to $6 while income and the price of cheese remain unchanged. What happened to the slope? Explain.
Akash M.
1. Suppose Larry's Lariats produces lassos in a factory and uses nine feet of rope to make each lasso. The rope is put into a machine that automatically cuts it to the right length, then seals the ends to prevent fraying. The rope is then hand tied, dipped, and wound before being placed in a packaging machine to prepare it for retail sale. If Larry were to decrease the production of lassos, which of the following is true regarding the company's costs? A. The variable costs of rope would drop to zero. B. The fixed cost of the rope cutting machine would stay the same. C. The fixed cost of the employee's wages would stay the same. D. None of these is true. 2. A price ceiling is: A. a legal maximum price. B. a legal minimum price. C. a legal maximum quantity that can be sold at a particular price. D. a legal minimum quantity that can be sold at a particular price. 3. A price floor is: A. a legal maximum price. B. a legal minimum price. C. a legal maximum quantity that can be sold at a particular price. D. a legal minimum quantity that can be sold at a particular price. 4. An effective price ceiling: A. must be set above the equilibrium price. B. must be set below the equilibrium price. C. must be set at the equilibrium price. D. can lead more goods to be produced in a market. 5. You decide to donate $5 to Jerry's Kids at the grocery store checkout and get to sign your name to a shamrock and hang it in their window. This is an example of the economic concept of: A. marginal utility. B. altruism. C. reciprocity. D. selfishness.
Tanvi G.
Dan's preferences are such that left shoes (good x ) and right shoes (good y) are perfect complements. Specifically, his preferences are represented by the utility function U ( x, y) = minimum {x, y}(a) Draw several of Dan's indifference curves. Which bundles are at the "kink-points" of these curves?(b) Assume that Dan's budget for shoes is M = 10 and that the price of a right shoe ispy= 2. Find and draw Dan's demand curve for left shoes (quantity demanded as a function of the price px). Given the shape of indifference curves from part (a), we can't use tangency to find the optimal affordable bundle. Instead, use part (a) to find the second equation that characterizes the location of the optimal bundle on the budget line.(c) If the price of right shoes decreases to py= 1 (income is still M = 10), what is the new demand curve for left shoes? Compare the new demand curve to the previous one and determine whether x and y are complements or substitutes.
Manasvee S.
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