What combination should he buy and why

Assignment Help Microeconomics

Reference no: EM133890113

Question: Sarah has $100 to spend each month on bread and chicken. Suppose the price of bread is $4 a loaf, and the price of chicken is $5 per pound.
Draw her budget constraint and label it BC0. Put bread on the horizontal axis and chicken on the vertical axis. Be sure to identify the intercept values.

Suppose Sarah is a utility maximizer and consumes ten loaves of bread and 12 pounds of chicken. On the same graph, you drew in part (a), draw an indifference curve to identify her optimal bundle. Label this bundle" "E."

Is her budget exhausted? Verify your answer.

Now suppose Sarah's income falls so that she can now devote only $80 to the two goods. Prices, however, remain unchanged. In the same diagram, graph her new budget constraint and label it BC1. Be sure to identify any new intercept values.

Following the change in income, can Farah consume the same bundle" "E"? Explain your answer.

What must happen to her total utility following the decrease in her income? Get affordable and professional assignment help service now!

Archie has $40 weekly on any combination of pineapples and green tea. The price of pineapple is $5, and a bottle of green tea is $2.50. The table below shows Archie's utility values. Use the table to answer the questions that follow.

Complete the table by filling in the blank spaces.

Suppose Archie purchases four pineapples and two bottles of green tea. Is he consuming the optimal consumption bundle? If so, explain why. If not, what combination should he buy and why?

Reference no: EM133890113

Questions Cloud

Describe line of authority for security policy : Describe the line of authority for security policy from the President to the Department of State (DOS).

Regulate sexual behavior of consenting adults : Should the government be able to regulate the sexual behavior of consenting adults? Why or why not?

How is national accreditation changing the landscape : After comparing the content to regional accreditation, how is national accreditation changing the landscape of higher education.

What is admitting diagnosis for this admission : What is the admitting diagnosis for this admission? Assign the appropriate ICD-10-CM code(s) if applicable.

What combination should he buy and why : Archie purchases four pineapples and two bottles of green tea. Is he consuming the optimal consumption bundle? If so, explain why. If not, what combination

Which dr dreisbach credit for making the king james version : Which does Dr. Dreisbach credit for making the King James Version of the Bible the ideal tool for literacy education during the founding era?

How many table lamps should ed produce : How many table lamps should Ed produce, and how much profit will he make? If next week the equilibrium price of desk lamps drops to $30, should Ed shut down?

Delegate and trustee : I want you to focus on the roles that Members of Congress play; delegate and trustee.

Create uncertainty that impacts business strategies : Promote inclusive teams. To stay competitive, rapid technological changes push businesses to keep employees' skills current and adopt new technologies

User Account

All Pages