Consumes two goods-find equation that gives every bundle

Assignment Help Business Economics

Reference no: EM13852891

Question (1)Iggy only consumes two goods: coffee and cigarettes. Three cigarettes can be traded for one cup of coffee in a free market, or one cup coffee can be traded for three cigarettes. Iggy initially has 12 cigarettes and 5 cups of coffees.

a. Find an equation that gives every bundle of cigarettes and coffee that Iggy could trade for.

b. Iggy has a MRS = -5 when he is holding his initial bundles (cigs, coffee)=(12,5). Given the rate of exchange, would Iggy trade cigarettes for coffee, or coffee for cigarettes?

Question (2) Consider a consumer who can purchase only two goods, x and y. If this consumer can, given her income, just afford two bundles(x,y)=(12,6) and (x,y)=(9,8). If Py=3, find the equation that describes her budget line.

Reference no: EM13852891

Questions Cloud

Examine the federal money supply : Examine how the Federal Reserve controls the money supply. In a paper, formulate how the independence of the Federal Reserve should or should not be modified in any way. Support your conclusions with references to the textbook and other resources.

Illustrate your answer with supply and demand curves : During the last 10 years Orlando, Florida, grew rapidly, with new jobs luring young people into the area. Despite increases in population and income growth that expanded demand for housing, the of price of existing houses barely increases. Why? Illus..

What is the estimated percent change in world price of oil : The elasticity of demand for oil is about 0.5, and the elasticity of supply is about 0.3. If the Arctic National Wildlife Refuge (ANWR) were drilled and the world supply of oil increased by 3 percent, what is the estimated percent change in the world..

Intersects d-elastic : In the graph here you will draw two different demand curves. 1. Use the infinite line too to draw a demand curve that is perfectly elastic at a price of $50. Label this curve D-Elastic.2. Use the infinite line tool to draw a demand curve that is less..

Consumes two goods-find equation that gives every bundle : Iggy only consumes two goods: coffee and cigarettes. Three cigarettes can be traded for one cup of coffee in a free market, or one cup coffee can be traded for three cigarettes. Iggy initially has 12 cigarettes and 5 cups of coffees. Find an equation..

Assume that during the severe drought the tomato harvest : Assume that during the severe drought the tomato harvest is dramatically reduced. Draw two supply curves for ketchup on the graph: one representing supply during a severe drought (label it S-During) and another representing supply after the drought i..

How will the income levels differ between them : Suppose that we are comparing two countries that are similar in every respect except the education of their population. In country 1, adults have 10 years of education. In country 2, alladults have 4 years of education. Use intuitions from the Solow ..

The two countries have the same levels of productivity : Suppose that there are two countries, X and Y, that differ in their rates of investment andtheir population growth rates. In Country X, investment is 20% of GDP and the populationgrows at 0% per year. In Country Y, investment is 5% of GDP, and the po..

How much oil does the department of energy''s energy : How much oil does the Department of Energy's Energy Information Service (EIS) predict the ANWR will produce?

User Account

All Pages