Indifference curves, Econometrics

Assume that the allowance Peter receives from parents is his only income.  He used to spend $30 a month to buy Coke at $.60 per can.  Coke is an inferior good for Peter.  Further assume that on October 1 price of Coke dropped to $.50 a can, while prices of other goods did not change. If Peter continued buying the same quantities of Coke and other goods, this would have obviously saved him $5.00. Assume, however, that parents reduced Peter's October allowance by $5.00.   

Please choose and explain your answers to the following questions and illustrate them by a detailed graph or graphs where the quantities of Coke are displayed on the horizontal axis, while the quantities of the composite of "other goods" are on the vertical axis. In your graph(s) please clearly mark Peter's choices in September, October and November as points Es , Eo , En . Please also clearly mark the corresponding budget lines and indifference curves.  

(i) Will Peter, in fact, buy more or less Coke in October than in September? 

a. more

b. less

c. this cannot be determined without additional information.

Posted Date: 4/1/2013 3:45:23 AM | Location : United States

Related Discussions:- Indifference curves, Assignment Help, Ask Question on Indifference curves, Get Answer, Expert's Help, Indifference curves Discussions

Write discussion on Indifference curves
Your posts are moderated
Related Questions
hypothetical data on consumption expenditure ($) and income ($) is given in the table x Y 80 55 100 65 85 70 110 80 120 79 115 84

I am beginning my thesis and I need some advice. I am trying to estimate a probit model. The binary dependent variable is employment status and the independent variables include:

what is the case of autocorrelation

economic system

#qu3. People educational achievement is affected, among other factors, by the demographic characteristics of their households; the following multiple regression model was estimated

The following table gives data on the Consumer Price Index (CPI) and the Standard & Poor (S&P) company''s index of 500 common stock prices. Year CPI Index S&P 500 Index 1978 65.2 9

what is indirect utility function?

Females, it is said, make 70 cents to the dollar in the United States. To investigate this phenomenon, you collect data on weekly earnings from 1,744 individuals, 850 females and

Suppose you have a model of capital investment by a U.S. rm. Imagine that yt, x1t and x2t are annual measures of investment, lagged pro t, and lagged capital stock, all in real do

Define McKinsey & Company's present "core competence" in terms used by Hamel & Prahalad and state how it fits with McKinsey's longer term vision. Answer) McKinsey an