Question

- You have an income of $80 to spend on movie tickets and the
composite good (all other goods), Y. Movie tickets cost $8 per
ticket and Y costs $16 per unit.
- Write an equation for your budget constraint.
- If you spent all your income on movie tickets, how much could you buy?
- What is the opportunity cost of movie tickets in terms of Good Y?
- If you spent all your income on Good Y, how much could you buy?
- Graph your initial budget constraint and label it
BC
_{0}. - Suppose the price of movie tickets increases to $10 while
everything else stays the same. Write down your new budget equation
and graph the new budget constraint; label it BC
_{1}. - Suppose your income increases to $96 while the prices of both
commodities remain at $8 for movie tickets and $16 for Y. Write
down your new budget constraint and graph the new budget constraint
and label it BC
_{2}.

Answer #1

You have an income of $80 to spend on movie tickets and the
composite good (all other goods), Y. Movie tickets cost $8 per
ticket and Y costs $16 per unit.
Write an equation for your budget constraint.
If you spent all your income on movie tickets, how much could
you buy?
What is the opportunity cost of movie tickets in terms of Good
Y?
If you spent all your income on Good Y, how much could you
buy?
Graph...

1. You have an income of $40 to spend on two goods. Good 1 costs
$10 per unit, and Good 2 costs $5 per unit.
(a) Write down an equation for your budget constraint.
(b) If you spent all of your income on Good 1, how much could
you buy?
(c) If you spent all of your income on Good 2, how much could
you buy?
(d) If consumption of Good 1is plotted on the x-axis and
consumption of Good...

3. An individual has an income of $1000 per month with which
they buy the composite good with a price of $1 and food with a
price of $2/unit of food. 1
(a) (10 Points) Draw the budget constraint for the individual
with the composite good on the y-axis and food on the x-axis.
(b) (10 Points) Now assume that the government gives the
individual food stamps worth $100. This is money that can only be
spent on food. Draw...

Amy has income of $M and consumes only two goods: composite good
y with price $1 and chocolate (good x) that costs $px per unit. Her
util- ity function is U(x,y) = 2xy; and marginal utilities of
composite good y and chocolate are: MUy = 2x and MUx = 2y.
(a) State Amy’s optimization problem. What is the objective
function? What is a constraint?
(b) Draw the Amy’s budget constraint. Place chocolate on the
horizontal axis, and ”expenditure all other...

1. Your uncle Eugenius generously gives you an allowance of $300
each semester to spend on ski lift tickets and meals out with
friends. Every time you go out to eat you spend pM = $20 per meal.
Ski lift tickets cost pS = $60 each. The quantities of meals out
and ski days you consume are denoted qM and qS, respectively.
(a) Write down the equation for your budget constraint.
Calculate the intercepts and slope (or, equivalently, the Marginal...

Say that you have an income of $300, all of which you spend on 2
goods: x1 and x2. The price of x1 is $1 and the price of x2 is
$10.
(a) (2 POINTS) Write down an equation for your budget
constraint.
(b) (2 POINTS) If the consumption of x1 is plotted on the xaxis
and the consumption of x2 is plotted on the yaxis, what is the
slope of the budget constraint?
(c) (3 POINTS) What is the...

Liam has $100 and spends his income on scratchers tickets
(priced at $1 per ticket) and guitar strings (priced at $4) per
set.
A. Graph Liam’s budget constraint, putting guitar strings on the
horizontal axis and scratchers tickets on the vertical axis. Using
an indifference curve, show Liam’s optimal consumption bundle if
Liam buys 60 scratchers tickets.
B. Suppose Liam’s income increases to by $20 (his income
increases to $120). Adding a new budget constraint and indifference
curve to your...

Imagine that you, a college student, have a budget of $1000. You
can spend this money on sweaters
($50 each) or “all other goods” (think of this as money, with a
price of $1).
(a) Write your budget equation using s for sweaters and x for all
other goods. Draw your budget
constraint (with sweaters on the vertical axis).
(b) Imagine that your aunts give you a gift of $500 in cash
(total). Write your budget equation. Draw your
new...

Suppose that the price of Good 1 falls to $5 while everything
else stays the same, you have an income of $40 to spend on two
goods. Good 2 costs $5 as well.
(a) Write down an equation for your budget constraint.
(b) What is the slope of the budget line when the price of Good
1 and Good 2 are both $5 and your income is $40?
(c) Say that the price of Good 1 and Good 2 are...

Please solve all the parts.Thank you.
A consumer can spend her income on two products, good X and good
Y . The consumer’s tastes are represented by the utility function
U(x, y) = xy.
a. Suppose that Px = 4 and Py = 1, and I = 16.
Draw the budget line and mark it as BL1. Initial optimum is at A.
Find the optimal amounts, xA and yA and locate A on the graph. Find
the initial level of...

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