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
Explain the difference among the usual (product moment) correlation and rank correlation. In what situations is it more appropriate to use rank correlation?

Provide a clear statement of the research topic and the underlying relationship that you are modeling. Identify the dependent variable and the independent variables (minimum of 3 i

Costs.  a.  Complete the following table.  Total Product (Q) Total Fixed Cost Total Variable Cost Total Cost Average Fixed Cost


Hello I am a PostGrad student. Need some help in the coursework

what are factors contributing to the long run trend interms of trade of developing countries?

What methodology will be suitable to use for a doctoral research proposal thesis(The impact of persistent poverty on rural urban migration in Nigeria)?

examples of economic relationships

i) Briefly distinguish between the Cournot duopoly model and that of Stackelberg.     ii) Suppose the  inverse  market demand curve for  a telecommunications equipment is P = 10

A store is known for is bargains. The store has the habit of lowering the price of its bargains each day, to ensure that articles are sold fast. Assume that you spot an item on Wed