Question

Suppose that in 2005, the prices of burger and pizza were, respectively, $5 and $1 per...

Suppose that in 2005, the prices of burger and pizza were, respectively, $5 and $1 per slice. In 2015, after some inflation, the prices became $9 and $2, respectively. If we ignore income effects and assume there are no other goods, would you expect this person's consumption of burger and pizza to have changed? Explain.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The price of pizza and burger have not changed in the same proportion. The price of pizza has exactly doubled but the price of the burger has less than doubled. According to the principle of equimarginal utility, a consumer maximizes utility when the last dollar spent on both the goods derive the same level of utility. Since the price of the goods has changed in different proportions, the consumption of the goods will be changed so that the consumer maximizes his utility.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
5. Suppose that Bobo purchases 1 pizza per month when the price is $19 and 3...
5. Suppose that Bobo purchases 1 pizza per month when the price is $19 and 3 pizzas per month when the price is $15. What is the price elasticity of Bobo’s demand curve? Multiple Choice a.0.235 b.2.00 c.4.25 d.6.33 6. Suppose that Mimi plays golf 5 times per month when the price is $40 and 4 times per month when the price is $50. What is the price elasticity of Mimi’s demand curve? Multiple Choice a.0.1 b.0.8 c.10.0 d.1.0 7....
Question 1 If you are trying to make yourself as happy as you can be given...
Question 1 If you are trying to make yourself as happy as you can be given the constraints that you face, you are effectively: Select one: a. trying to find the intersection point between two budget constraints. b. trying to find the point on the budget constraint that is on the highest indifference curve. c. trying to find the point where the budget constraint and an indifference curve intersect. d. trying to find the point on an indifference curve that...
1. Suppose the U.S. equilibrium price of beef is $2 per kilo and Japan equilibrium price...
1. Suppose the U.S. equilibrium price of beef is $2 per kilo and Japan equilibrium price of beef is $4 per kilo; international equilibrium would be established by A. The intersection of U.S. excess supply and Japan excess demand of beef. B. The intersection of Japan excess supply and U.S. excess demand of beef. C. The intersection of U.S. and Japan excess supply of beef. D. The intersection of U.S. and Japan excess demand of beef. 2. Other things being...
If a good is a normal good, its Engel curve should be Question 1 options: decreasing...
If a good is a normal good, its Engel curve should be Question 1 options: decreasing None of the other answers is correct a horizontal line increasing Question 2 (0.5 points) Which of the following claims about inferior goods is correct? Question 2 options: If a good is inferior, it will be so at all income levels (for the same individual) If a good is inferior it must be low quality When income goes up, the quantity demanded of the...
Question 1 The line that connects the combinations of goods that leave you indifferent is called:...
Question 1 The line that connects the combinations of goods that leave you indifferent is called: Select one: a. the indifference curve. b. the budget constraint. c. the indifference constraint. d. the indifference line. Question 2 An increase in income will cause: Select one: a. the budget constraint to become flatter, so that it includes more combinations. b. the budget constraint to become steeper, so that it includes more combinations. c. a parallel shift inward of the budget constraint. d....
answer the following questions Q21.When the economy experiences an expansion, it is most likely the case...
answer the following questions Q21.When the economy experiences an expansion, it is most likely the case that------------------------------- GDP is increasing, unemployment is increasing, and inflation is decreasing. GDP is increasing, unemployment is decreasing, and inflation is increasing. GDP is decreasing, unemployment is decreasing, and inflation is increasing. GDP is decreasing, unemployment is decreasing, and inflation is decreasing. Q22. GDP is an important economic measurement because it provides valuable data on unemployment rates measures the combined total of all intermediate and...
1. In the short-run IS-LM model with income taxation, taxes are given by ?=? +??. Suppose...
1. In the short-run IS-LM model with income taxation, taxes are given by ?=? +??. Suppose that MPC = 0.75 and the marginal tax rate ?=0.2. Then, when ? decreases by 1000, then for any given interest rate, the IS curve shifts: Select one: a. to the left by 1000. b. to the right by 3000. c. to the right by 3750 d. to the right by 1875. 2. Suppose that the adult population in an economy is 28 million,...
62. As noted in the article about trading pits, a. futures pits in Chicago were closing...
62. As noted in the article about trading pits, a. futures pits in Chicago were closing down. b. futures pits in New York were closing down. c. floor trading on the New York Stock Exchange were closing down. d. All of the above. e. Only A and B of the above. 63. Which of the following are among the lessons that we can reasonably draw from the collapse of Continental Illinois? a. The aggressive pursuit of commercial loans was doomed...
Chapter 5 Import Protection Policy: Import Tariffs I. Chapter Overview 1. Types of import tariffs in...
Chapter 5 Import Protection Policy: Import Tariffs I. Chapter Overview 1. Types of import tariffs in terms of the means of collection in terms of the different tariff rates applied in terms of special purposes for collection 2. The effects of import tariffs concepts of consumers surplus and producers surplus the welfare effects of import tariffs 3. Measurement of import tariffs the "height" of import tariffs nominal versus effective tariff rates II. Chapter Summary 1. The means of collecting import...
exhibit one 2006 2005 2004 2003 2002 sales 78,599,808 81,874,800 86,184,000 75,600,000 67,500,000 sales in units...
exhibit one 2006 2005 2004 2003 2002 sales 78,599,808 81,874,800 86,184,000 75,600,000 67,500,000 sales in units 5,239,987 5,458,320 5,745,600 5,040,000 4,500,000 cost of goods sold variable variable 29,081,929 31,112,424 31,026,240 27,972,000 24,975,000 fixed $27,865,240 23,221,033 21,701,900 19,729,000 18,100,000 gross profit $21,652,639 27,541,343 33,455,860 27,899,000 24,425,000 atributable costs marketing $5,894,986 6,140,610 5,774,328 5,140,800 4,758,750 other (primarily fixed) $2,517,537 2,502,522 2,317,150 2,106,500 1,915,000 product line profit before G&A allocation $13,240,117 18,898,211 25,364,382 20,651,700 17,751,250 return on sales 16.84% 23.08 29.43 27..32 26.30...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT