Question

AAbe and Mary both purchase corn chips and chocolate milk at their friendly neighborhood convenience store....

AAbe and Mary both purchase corn chips and chocolate milk at their friendly neighborhood convenience store. The two friends have different tastes for corn chips and chocolate milk and they end up purchasing very different quantities of the two commodities. Nevertheless, they have the same marginal rate of substitution of chocolate milk for corn chips. Explain how this is possible

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Commodities are bought in quantities where marginal rate of substituion(MRS) equals the price ratio of the commodities. Here MRS is equal for two buys but quantities are diffrent, This, implies the ratio of prices of the two goods faced is different for the two. The concept of price discrimintion tells us two consumers can face different prices on same good based on their location maximum willingness to pay and elasticity of their demand. Thus, ratio of price of corn chips to chocolate milk is different for AAbe and Mary, thus they end up buying different quantities.

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
Use the business developed below. Explain the 10 assumptions that you used in developing this business....
Use the business developed below. Explain the 10 assumptions that you used in developing this business. Overview- We are going to start a bakery business as I have my interest in bakery. This is going to be start-up business plan. The name of our Bakery would be “Bake It or Make It”. It would be managed by me along with my team of new bakers around the city. Opening a bakery at initial stage would involve a lot of investment...
1. Explain and give examples of the 5 existing business model patterns. 2. Can the business...
1. Explain and give examples of the 5 existing business model patterns. 2. Can the business below use that business model pattern? Explain. Overview- We are going to start a bakery business as I have my interest in bakery. This is going to be start-up business plan. The name of our Bakery would be “Bake It or Make It”. It would be managed by me along with my team of new bakers around the city. Opening a bakery at initial...
Analyze the market segmentation, which is explained in the market segmentation for business design below. Overview-...
Analyze the market segmentation, which is explained in the market segmentation for business design below. Overview- We are going to start a bakery business as I have my interest in bakery. This is going to be start-up business plan. The name of our Bakery would be “Bake It or Make It”. It would be managed by me along with my team of new bakers around the city. Opening a bakery at initial stage would involve a lot of investment and...
Use the business developed below. Explain the 10 assumptions that you used in developing this business.(...
Use the business developed below. Explain the 10 assumptions that you used in developing this business.( please explain ) Overview- We are going to start a bakery business as I have my interest in bakery. This is going to be start-up business plan. The name of our Bakery would be “Bake It or Make It”. It would be managed by me along with my team of new bakers around the city. Opening a bakery at initial stage would involve a...
Facts from Client Interview Tumutch and Lotta Bolloni have been married for four years. They both...
Facts from Client Interview Tumutch and Lotta Bolloni have been married for four years. They both work very hard at their jobs – Lotta being an accountant and Tumutch working as a construction manager. They decide to splurge and look into booking an all-inclusive vacation to the enchanting Fantasy Island, in Fiji for February 2020. The Bollonis do some research into different travel packages and get quotes from various agencies. They narrow their choices down to three possibilities: Travelcations &...
Total utility can be objectively measured in numbers that indicate usefulness or benefit to the consumer....
Total utility can be objectively measured in numbers that indicate usefulness or benefit to the consumer. ____ 2. Consumers should purchase quantities of a good to the point where MU > P. ____ 3. Voluntary exchange requires that there must be mutual gain. ____ 4. Points along a budget line represent the maximum combinations of two commodities that a consumer can afford. ____ 5. The budget line represents a consumer's preferences for a commodity. ____ 6. A change in consumer...
When is a hypothesis considered scientific? a. when it is based on something other than observation...
When is a hypothesis considered scientific? a. when it is based on something other than observation b. when it can be tested and is refutable c. when it relies on anecdotal evidence d. when it relies on mystical explanations e. All hypotheses are considered scientific until experiments determine otherwise. 3. Of the following, which is the earliest step in the scientific process? a. generating a hypothesis b. analyzing data c. conducting an experiment d. drawing a conclusion e. developing a...
The questions: 1. What type of technology Acme and Omega utilize to transform inputs into outputs?...
The questions: 1. What type of technology Acme and Omega utilize to transform inputs into outputs? 2. Which strategic choice (differentiation or cost leadership) suits best to Acme? Omega? Do these companies have clear strategic choices or do they stuck in the middle? 3. Based on all the contingencies which type of structure is more suitable for these companies; mechanistic or organic? please answer each question alone The Paradoxical Twins: Acme and Omega Electronics John F. Veiga Part! boom of...
In February 2012, the Pepsi Next product was launched into the US market. This case study...
In February 2012, the Pepsi Next product was launched into the US market. This case study provides students with an interesting insight into PepsiCo’s new product process and some of the challenging decisions that they faced along the way. Pepsi Next Case Study Introduction Pepsi Next was launched by PepsiCo into the US market in February 2012, and has since been rolled out to various international markets (for instance, it was launched in Australia in September 2012). The new product...
Review the Robatelli's Pizzeria Case Study. Develop another internal controls system, but this time, in the...
Review the Robatelli's Pizzeria Case Study. Develop another internal controls system, but this time, in the purchases and fixed assets business areas. Prepare a 12- to 16-slide presentation describing the purchases and fixed assets business areas. Be sure to incorporate speaker notes as well as appropriate visuals, graphics, fonts, etc. Include any associated risk in these areas. Describe specific internal controls that include authorization of transactions, segregation of duties, adequate records and documentation, security of assets, and independent checks and...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT