Chapter 4, Consumer Equilibrium and Market Demand Video Solutions, Introduction to agricultural economics

Problem 1

Betty and Wilma wish to buy blouses and jeans. Betty has a budget of $$\$ 600$$, while Wilma has a budget of $$\$ 1,200$$. Using the indifference curve analyses given in the following table, determine prices for the blouses and jeans. For which commodity can you derive a demand curve? Derive this curve for Betty and Wilma. Finally, derive the market demand curve, assuming that they are the only consumers.
$$
\begin{array}{|c|c|c|c|c|c|}
\hline & & \begin{array}{c}
\text { Quantity of } \\
\text { Blouses }
\end{array} & \begin{array}{c}
\text { Pairs of } \\
\text { Jeans }
\end{array} & \begin{array}{l}
\text { Price of } \\
\text { Blouses }
\end{array} & \begin{array}{c}
\text { Price of } \\
\text { Jeans }
\end{array} \\
\hline {\text { Betty }} & \text { A } & \text { | } & & & x^2 \\
\hline & \text { B } & & & & \\
\hline {\text { Wilma }} & \text { A } & & & & \\
\hline & \text { B } & & & & \\
\hline
\end{array}
$$
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Melissa Munoz

Numerade Educator

02:28

Problem 2

The budget for this consumer is $$\$ 48$$.
a. What is the price per pound of steak?
b. What is the price per pound of chicken?
c. List two true statements centered on point $A$ regarding equilibrium and regarding utility and budget (many answers are possible):
i.________
ii.___________
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Teresa Fuston

Numerade Educator

02:26

Problem 3

a. Illustrate a demand curve for Chobani Yogurt.
Label your axes appropriately.
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b.The graph below depicts a_______ demand curve.
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c.The graph below depicts a______demand curve.
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Xiaomin Bian

Numerade Educator

03:12

Problem 4

Derive separate Engel curves for products $A$ and $B$ from the following indifference curve analysis. Assume $$P_A=\$ 1.50$$ and $$P_{\mathrm{B}}=\$ 2.25$$. Are these goods normal or inferior?
$$
\begin{aligned}
&\text { See Indifference Curves That Follow: }\\
&\begin{array}{|l|l|l|l|}
\hline & \text { Quantity of A } & \text { Quantity of B } & \text { Income } \\
\hline P T_1 & & & \\
\hline P T_2 & & & \\
\hline P T_3 & & & \\
\hline
\end{array}
\end{aligned}
$$
Engel Curve for Product A
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Engel Curve for Product B
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Akash M

Numerade Educator

02:31

Problem 5

The graph below is a market demand curve for steaks.
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a. Clearly label the consumer surplus associated with a market price of $$\$ 6$$ using the letters on the graph from the previous page.
b. Suppose the market price decreases to $$\$ 4$$. Are consumers better off or worse off because of this decrease in market price? Using the letters on the previous graph, label the change in consumer surplus.
c. Calculate the dollar amount of the consumer surplus in (a). Be careful of your units of measurement.
d. Calculate the dollar amount of the change in consumer surplus in (b). Be careful of your units of measurement.

Crystal Wang

Numerade Educator

02:31

Problem 6

a. The graph below is a demand curve for shrimp from Galveston Bay. Suppose that the Environmental Protection Agency finds that there are toxic levels of a pesticide in Galveston Bay. Show graphically what happens to the demand curve for shrimp in light of this information.
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b. Is the situation described in (a) a change in quantity demanded or a change in demand? Circle your answer.

Crystal Wang

Numerade Educator

00:50

Problem 7

Consider the following diagram.
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a. This diagram pertains to $a(n)$ curve._____________
b. Shrimp is a(n)._____________ good

Amy Jiang

Numerade Educator

02:02

Problem 8

According to the following graph, the consumer is said to be in__________ at point A.
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Michelle Alfonso

Numerade Educator

01:53

Problem 9

Assume that the good in question is a normal good. Which of the following will shift the demand curve to the right? Circle all that apply.
a. Increase in income.
b. A successful advertising campaign.
c. Decrease in income.
d. The American Medical Association reports that the consumption of this product would lower cholesterol levels by $25 \%$.
This rightward shift corresponds to a change in____________

Jennifer Stoner

Numerade Educator

Problem 10

Assume that for a given consumer, the marginal utility of Dreyer's Ice Cream is 120 , and the price of Dreyer's is $$\$ 4$$ per gallon. Also, assume that the marginal utility of Blue Bell Ice Cream is 160 , and the price of Blue Bell is $$\$ 5$$ per gallon. This consumer
a. is in equilibrium.
b. should buy more Blue Bell.
c. should buy more Dreyer's.
d. can't tell; insufficient information.

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01:12

Problem 11

Changes in taste and preferences refer to changes in
a. composition of the population.
b. attitudes toward nutrition and health.
c. attitudes toward food safety.
d. all of the above.

Courtney Burson

Numerade Educator

01:51

Problem 12

The connection of all tangency points between budget lines and indifference curves is called the a. Engel curve.
b. price-consumption curve.
c. demand curve.
d. none of the above.

Anand Jangid

Numerade Educator

01:36

Problem 13

The Latin phrase used by economists meaning "all other factors held constant" is_____________

Daniel Cisneros

Numerade Educator

Problem 14

Which of the following is the best example of an inferior good?
a. A ribeye steak from Del Frisco's
b. Margarine
c. Butter
d. Vintage California wine

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00:56

Problem 15

Which of the following diagrams best illustrates the immediate impact of a food safery scare due to mad cow disease? (Note: $D_0$ is the original relationship and $D_1$ is the new relationship.)
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Lily An

Numerade Educator

Problem 16

The demand curve for a product shifts to the right. Which of the following statement(s) is/are plausible explanation(s) for this situation?
a. The price of a competing product decreased.
b. A successful television advertising campaign was launched by the manufacturer of the product.
c. Assuming the commodicy in question is a normal good, the income available to the consumer increased.
d. b and $c$.

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04:47

Problem 17

Individual demand schedules for three customers from the local H-E-B store in the purchase of ice cream are given below:
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What is the quantity demanded of ice cream at a price of $$\$ 1.65$$ assuming that the only consumers in this market are customers $\mathrm{A}, \mathrm{B}$, and $\mathrm{C}$ ?
a. 16
b. 22
c. 25
d. Can't tell; insufficient information

Christian Le Doux

Numerade Educator

04:45

Problem 18

Consider the diagram to the right. At point C, which of the following statement(s) is (are) true?
a. The optimal purchase for this consumer is 8 glasses of Kool-Aid and 6 glasses of tea.
b. The marginal rate of substitution is $-3 / 4$.
c. $\frac{\mathrm{MU}_{\text {Kool-Aid }}}{P_{\text {teat }}}=\frac{\mathrm{MU}_{\text {ted }}}{P_{\text {Kool-Aid }}}$
d. All of the above.
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Natalie Britton

Numerade Educator

06:34

Problem 19

In light of the diagram associated with question 18 , if the budget for this consumer is $$\$ 48$$, then
a. at point $\mathrm{C}$, the consumer is said to be in equilibrium.
b. the price per glass of Kool-Aid is $$\$ 4$$.
c. the price per glass of tea is $$\$ 3$$.
d. all of the above.

Ahmad Reda

Numerade Educator