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
Suppose that the aggregate demand curve in a particular year is given by the algebraic           expression:  Y = 3000 + 1000/P, where Y is the aggregate output and P is t

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

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:

the following are the weekly amounts of welfare payments made by the federal government to a sample of six families: $139, $136,$130,$136,$147and$136.what is the range

how to find the relationship for a simple linear model?

Need to run MGARCH (system) in SAS or other software. Have data.


Question: (a) Formulate a VAR with 4 lags and also rewrite it in matrix form, mentioning the limitations of such models. (b) What is the rationale behind introducing lag-dep

Suppose time-series data has been generated according to the following process: where t is independent white noise. Our main interest is consistent estimation of Φ from r

a) Design a simple econometric project to identify the factors that affect the demand for a good or service of your preference. Estimate the significance of these factors using mu