Draw the budget constraint showing the trade-off between

Assignment Help Macroeconomics
Reference no: EM13335194

A college student has two options for meals: eating at the dining hall for $6 per meal, or eating a Cup O’ Soup for $1.50 per meal. His weekly food budget is $60.

a. Draw the budget constraint showing the trade-off between dining hall meals and Cups O’ Soup. Assuming that he spends equal amounts on both goods, draw an indifference curve showing the optimum choice. Label the optimum as point A.

b. Suppose the price of a Cup O’ Soup now rises to $2. Using your diagram from part (a), show the consequences of this change in price. Assume that our student now spends only 30 percent of his income on dining hall meals. Label the new optimum as point B.

c. What happened to the quantity of Cups O’ Soup consumed as a result of this price change? What does this result say about the income and substitution effects? Explain.

Exercise 2: 

The rent control agency of Hanoi has found the aggregate demand and aggregate supply for house renting market was

Qd = 100 – 5P

Qs = 50 + 5P

While Q: is measured by thousands of apartments P: is

Reference no: EM13335194

Questions Cloud

Conduct a search for scholarly articles : Conduct a search for scholarly articles. Find five scholarly articles that you are interested in and provide a direct quotation with citation for each of the articles
Determine what will be next years eps in projects : If Sidman reinvests retained earnings in projects whose average return is equal to the stock's expected rate of return, what will be next year's EPS
What is the expected growth rate if investors require return : Sidman Products' common stock currently sells for $70 a share. The firm is expected to earn $7.70 per share this year and to pay a year-end dividend of $3.90, and it finances only with common equity.
Prepare a schedule to determine cost of one unit of product : Compute the predetermined overhead rate, using direct labor dollars as the allocation base and which are provided in anticipation of the coming accounting period. Using these data, prepare a schedule to determine the cost of one unit of product.
Draw the budget constraint showing the trade-off between : Draw the budget constraint showing the trade-off between dining hall meals and Cups O’ Soup. Assuming that he spends equal amounts on both goods, draw an indifference curve showing the optimum choice. Label the optimum as point A.
An interdependent network of employees : Today's health care organizations rely on an interdependent network of employees
What would be the cost of equity from new common stock re : A firm expects to earn $3.50 per share during the current year, its expected dividend payout ratio is 65%, its expected constant dividend growth rate is 6.0%, and its common stock currently sells for $32.50 per share.
Compute the cost of external equity-re of the issue proceeds : Suppose a company issues common stock to the public for $25 a share. The expected dividend is $2.50 per share and the growth in dividends is 8%. If the flotation cost is 10% of the issue proceeds
Write the expression for the demand curve : Write the expression for the demand curve, i.e., P = f(Q). What kind of expression is this?

Reviews

Write a Review

Macroeconomics Questions & Answers

  To estimate the coefficients mean

You have been hired by a local used car dealer to help in their pricing of used cars. then what the estimated coefficients mean for each of these regressions.

  Event article relates to government regulations

Maker an article or current event article which relates to government regulations or antitrust activities.

  What is the real interest rate if the nominal interest

What is the real interest rate if the nominal interest rate is 8% and the expected inflation rate is 10% over the course of a year

  Strategies that permit the vertically integrated

Explain why this strategy may, in fact, be rational. Also, identify at least two other strategies that might permit Argyle to earn higher profits.

  Illustrate what happened to employment during the rest

Illustrate what happened to employment during the rest of 2008. What are some of the alternatives to a tax cut that might have been used.

  What combination of quality-price will be most successful

A firm can seek any combination of quality and price it chooses. Thus, it can go with a low quality-low price strategy or use one which combines high quality with a high price. Ideally, of course a high quality and a LOW price will be the most pow..

  Calculate the company free cash flow

The last free cash flow for a company was $51 million and it is expected it to increase at a constant rate of 4% indefinitely. The company's weighted average cost of capital is 12%.

  Determine total profit functions

Philips Industries produces a certain product that can be sold directly to retail outlets or to the Superior firm for further processing and eventual sale as a completely different product.

  Find out the total hours per week

The following table shows the hours per week supplied to a particular market by three individuals at various wage rates. Calculate the total hours  Per week (Q T ) supplied to the market.

  What operational and financial measures can a mnc take

What operational and financial measures can a MNC take in order to minimize the political risk associated with a foreign investment project?

  Why didnt perceive play things as potential learning tools

Many Indian mothers weren't willing to make an investment in the company's educational toys because research showed they didn't perceive the play things as potential learning tools. But a shift in attitude began about two years ago.

  What is the relative price of a dvd

Jason enjoys DVDs and spy novels and spends $60 a month on them. The price of a DVD is $20 and the price of a spy novel is $10. a. What is Jason's real income in terms of spy novel?

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