What is marvins optimal bundle, Microeconomics

Marvelous Marvin spends his money on muffins (m) and a composite good (c) (whose price you may assume is $1 throughout this problem). Marvin's utility is U = m + c and his income (I) is 20.

1. Suppose the price of muffins (pm) is 2. Draw Marvin's budget constraint and the highest indifference curve he can reach.

2. What is Marvin's optimal bundle?

3. Suppose that Marvin has the option of joining a muffin club for a membership fee of $10. Club members can purchase muffins for $0.40 each. Draw Marvin's budget constraint if he joins the club. Draw the highest indifference curve he can reach.

4. What is Marvin's optimal bundle (when he is a member of the club)?

5. Will Marvin choose to join the club? Why?

 

Posted Date: 3/1/2013 6:44:18 AM | Location : United States







Related Discussions:- What is marvins optimal bundle, Assignment Help, Ask Question on What is marvins optimal bundle, Get Answer, Expert's Help, What is marvins optimal bundle Discussions

Write discussion on What is marvins optimal bundle
Your posts are moderated
Related Questions
A 1500 word research paper on the economic, social or environmental effects of the widespread use of robots in factories (this meets Learning Outcome 4)

Problem 1: Health insurance leads to health promotion. Using diagrams, describe the impact of health insurance on the demand for health care. (a) Distinguish between negati

INTERNATIONAL MONETARY FUND: The important objectives before the Fund presently are as follows: • To promote international cooperation; • To facilitate the expansion and ba

how has the haberlers theory of opportunity cost an improvement over the classical theory of trade

What is average revenue and average revenue curve Average Revenue:   The average revenue is the total revenue separated by the level of output. It is therefore the price.

Question 1: (a) Describe the three different ways of calculating national income. (b) Does the National Income figure accurately reflect the living standardof a population?

Assume the banking system contains: Total Reserves                         $ 80 billion Transactions Deposited          $800 billion Cash held by public                 $1

what does General Equilibrium in consumption means?

What is the classical model's explanation for involuntary unemployment? According to the classical model, involuntary unemployment only increases when there is something impedi

Problem: (a) Consider the Classical Linear Regression Model (CLRM) Y i = α + βX i + ε i (i) Using the method of ordinary least squares (OLS), derive an expression for