Draw the budget constraint for the individual

Assignment Help Business Economics
Reference no: EM13885589

An individual has an income of $1000 per month with which they buy the composite good with a price of $1 and food with a price of $2/unit of food.

(a) Draw the budget constraint for the individual with the composite good on the y-axis and food on the x-axis.

(b) Now assume that the government gives the individual food stamps worth $100. This is money that can only be spent on food. Draw the new budget constraint for the individual on your graph from part a.

(c) Assume instead that the government had given the individual $100 in cash. Draw the new budget constraint for the individual on your graph from part a.

(d) Would the consumer prefer to get $100 in food stamps or $100 in cash? You need to justify your answer thinking through the possible optimal consumption bundles for the consumer.

Reference no: EM13885589

Questions Cloud

Conclusions about photosynthesis : When algae growing in water containing only 16O were furnished carbon dioxide containing 18O, no 18O was found to be evolved from the oxygen gas produced. What conclusions about photosynthesis can be drawn from these experiments?
What is the dependent variable in the study : How many subjects will be in the experimental and control groups and What is the dependent variable in the study? How will it be measured? How many times will it be measured?
Property transactions and tax avoidance : Property Transactions and Tax Avoidance
What challenges faced in training expatriate managers : What are some of the challenges faced in training expatriate managers? As an HR manager what can you do to overcome those challenges? Be thorough in your analysis
Draw the budget constraint for the individual : An individual has an income of $1000 per month with which they buy the composite good with a price of $1 and food with a price of $2/unit of food. Draw the budget constraint for the individual with the composite good on the y-axis and food on the x-a..
What is the degree of membership to the fuzzy set : Draw the graphic for the healthy set, representing the values, healthy and unhealthy and what is the degree of membership to the fuzzy set healthy of person B who has a BMI of 26.2? And to the fuzzy set unhealthy?
Most toxic substances known : Consider the following information: i. The layer of dead skin on our bodies is sufficient to protect us from most -particle radiation. ii. Plutonium is an -particle producer. iii. The chemistry of Pu4 is similar to that of Fe3. iv. Pu oxidizes..
Estimate the total value of illinois tool works common share : With these relatively simple assumptions, use the abnormal earnings model to estimate the total value of Illinois Tool Works' common shares as of the end of Year 3.
Federal reserve buys some government bonds : Equilibrium exists where the price level is 1.25 and the money supply equals 21 billion. What is a new possible equilibrium when the Federal Reserve buys some government bonds?

Reviews

Write a Review

Business Economics Questions & Answers

  Determine the capitalized cost for each design

Two incinerators are being considered by a waste management company. Design A has an initial cost of $2,750,000, has annual operating and maintenance costs of $1,000,000, and requires overhauls every 5 years at a cost of $825,000.

  Willing to pay for the privilege of moving

In the following game, determine the maximum amount you would be willing to pay for the privilege of moving (a) first, (b) second, or (c) third: There are three players, you and two rivals. The player announcing the largest integer gets a payoff of $..

  Compute the equilibrium price and quantity in this market

Consider a market characterized by the following inverse demand and supply functions: PX = 10 - 2QX and PX = 2 + 2QX. Compute the equilibrium price and quantity in this market.

  Describe the market behavior that should result

Assuming no government intervention, describe the market behavior that should result if the price of a product is below its equilibrium price; then describe the behavior that should occur if the price is above its equilibrium price.

  Cash flow diagram-utilize functional notation

A construction manager just starting in private practice needs a van to carry crew and equipment. She can lease a used van for $3,738 per year, paid at the beginning of each year, in which case maintenance is provide. Alternatively, she can buy a use..

  Consumer receives income y in the current period

A consumer receives income y in the current period, income y in the future period, and pays taxes t and t' in the current and future periods, respectively. The consumer can lend at real interest rate r. the consumer is given two options.

  What is the opportunity cost of an additional unit of food

Ryan has $200 per week to spend on gas and food. The price of gas is $4/gallon and the price of food is $2 unit. What is the opportunity cost of an additional unit of food in terms of gallons of gas? What is the opportunity cost of a gallon of gas in..

  Growing economy means that the economy is producing

A growing economy means that the economy is producing more also more stuff, either since it has more resources.

  Calculate the firms profit

A perfectly competitive firm sells 50,000 units of knives at a price of $3. The firm's average cost at 50,000 units is $2.75. Calculate the firm's profit.

  Cost of short-term credit

Fair cross Farms harvests its crops four times annually and receives payment for its crop 90 days after it is picked and shipped. However, planting, irrigating, and harvesting must be done on a nearly continual schedule.

  What are the main differences between microeconomic

What are the main differences between microeconomics and macroeconomics? Provide an example of a microeconomic and macroeconomic phenomenon.

  Functional organizations and product organization

Define the following: functional organizations, product organization, geographic organization, matrix organization also network organization.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd