Question

You have to draw indifference curves and budget constraints to express your answers. The test will...

You have to draw indifference curves and budget constraints to express your answers.

The test will be held 15 hours later. Sally has yet to study for it. Suppose an hour of study can increase the score by 5 in the test.

(a) Draw the budget constraint of Sally. (Hint: good x is sleeping in hours, and good y is test score)

(b) The test is unexpectedly delayed for 5 hours. Do you think that Sally’s test score must be higher? Explain your answer intuitively and graphically.

(c) Although the test is delayed for 5 hours, Sally finds that some of the course materials are much more difficult than expected. For the first 10 hours, an hour of study can increase the score by 5. For the rest, an hour of study can increase the score by 3 only. Draw the new budget constraint of Sally.

(d) Suppose Sally choose to sleep for 10 hours in part c. Will Sally be worse off in part d? Explain your answer intuitively and graphically.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

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
The test will be held 15 hours later. Student K has yet to study for it....
The test will be held 15 hours later. Student K has yet to study for it. Suppose an hour of study can increase the score by 5 in the test. (a) Draw the budget constraint of K. (Hint: good x is sleeping in hours, and good y is test score) (b) The test is unexpectedly delayed for 5 hours. Do you think that K’s test score must be higher? Explain your answer intuitively and graphically. (c) Although the test is...
You are a student in ECON 110, and your test is 24 hours from now. You...
You are a student in ECON 110, and your test is 24 hours from now. You can spend this time either studying or sleeping. Suppose you know that the impact of studying and sleeping on the test score is ?(?, ?) = 8?0.5 + ?, where ? is the number of hours you spend studying (“working”) and ? is the number of hours you spend sleeping (“resting”). Assume your goal is to maximize your score on the test. a) How...
1. Show a consumer’s budget constraint and indifference curves for soda drinks and slices of pizza....
1. Show a consumer’s budget constraint and indifference curves for soda drinks and slices of pizza. Show the optimal consumption choice. If the price of soda drinks is $1.50 per can and the price of a slice of pizza is $2 per slice, what is the marginal rate of substitution at the optimum? 2. Suppose the income elasticity of demand for food is 0.5 and the price elasticity of demand is −0.25. Suppose also that Mia spends $10,000 a year...
1. Show a consumer’s budget constraint and indifference curves for soda drinks and slices of pizza....
1. Show a consumer’s budget constraint and indifference curves for soda drinks and slices of pizza. Show the optimal consumption choice. If the price of soda drinks is $1.50 per can and the price of a slice of pizza is $2 per slice, what is the marginal rate of substitution at the optimum? 2. Suppose the income elasticity of demand for food is 0.5 and the price elasticity of demand is −0.25. Suppose also that Mia spends $10,000 a year...
1. Prove that two indifference curves cannot intersect. (Hint: use the transi-tivity axiom) (Part II: Budget...
1. Prove that two indifference curves cannot intersect. (Hint: use the transi-tivity axiom) (Part II: Budget Constraint) Put meat on horizontal and potatoes on vertical axis. 1. (Day 1) Suppose your income is $10, the price of both meat and potatoes is $1. Find the budget constraint equation and draw the budget line. Specify the two intercepts and explain what they mean. 2. (Day 2) The prices of meat and potatoes are now $0.5 and $2, respectively. In addition, your...
Suppose you have 24 hours per day that you can allocate between leisure and working. (i)...
Suppose you have 24 hours per day that you can allocate between leisure and working. (i) Draw the budget constraint between “leisure hours” on the horizontal axis and “wage income” on the vertical when the wage rate is $40 per hour. Mark an optimum point A that is meaningful. Draw a new budget constraint when the wage rate falls to $30 per hour. Show a new optimum point B. (ii) On your indifference curve diagram, decompose the effect of the...
Answer the following questions and be sure to explain your answers. 1.) Consider a labor-leisure tradeoff...
Answer the following questions and be sure to explain your answers. 1.) Consider a labor-leisure tradeoff problem where 24 hours must be divided between labor and leisure. You can assume that for simplicity and assume that labor is paid a wage . When plotting the time constraint and indifference curves, be sure to put leisure on the x-axis and consumption on the y-axis. a.) Draw the time constraint and give its equation in slope-intercept form. b.) Suppose now that the...
Suppose you study 3 hours per day and your test grade was 70. For each member...
Suppose you study 3 hours per day and your test grade was 70. For each member of the group, draw an indifference curve representing combinations of grade and free time that would give you equal satisfaction. Discuss reasons for why your indifference curves might be different/the same.
Ira’s only source of income is from working. He can work as many hours per day...
Ira’s only source of income is from working. He can work as many hours per day as he wishes (up to a maximum of 24 hours) at a fixed wage rate of $10 / hour. a. Initially, assume that there is no income tax.   Draw Ira’s budget constraint. b. Now suppose, that the government introduces a tax rate of 50 cents in the dollar. Suppose that leisure is a normal good that tax ends up reducing Ira’s hours worked. Show...
2. What is the relationship between marginal utilities and prices when you are maximizing your satisfaction?...
2. What is the relationship between marginal utilities and prices when you are maximizing your satisfaction? (Your answer must include a discussion of budget constraints, the choice of the consumption bundle with the highest satisfaction, marginal utilities and use your answers in previous question.) (Part II: Budget Constraint) Put meat on horizontal and potatoes on vertical axis. 1. (Day 1) Suppose your income is $1000, prices of meat and potatoes are $10 and $20, respectively. Find the budget constraint equation...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT