Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider an Individual... Question 1. (a) consider an individual with $40 to spend on 2 goods, x and y. The price of x is 5.

Consider an Individual...

image text in transcribed
Question 1. (a) consider an individual with $40 to spend on 2 goods, x and y. The price of x is 5. The slope of the budget constraint is -1.25. What is the price of y? Sketch the budget constraint and choice set, labelling your graph and indicating the intercepts. Now suppose it takes 0.75 hours of online searching to find each unit of x and 1 hour to find each unit of y. An individual has 10 hours total to search for purchases. What is the maximum number of x and y this person can find in that time? Sketch the time constraint and indicate the choice set for both money and time. Show your work. (b) consider an individual with $100 deciding over two goods, x and y. The price of x is $5 and the price of y is 10. Instead of a constant $5 per unit of x, the local stores have only 8 units to sell at that price. If the individual wants to buy more than 8 units, they have to buy online at the higher price of $12 including shipping. Sketch the budget constraint, clearly labelling the slope(s), maximum amounts of x and y that can be purchased and the choice set. Show your work

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Economics A Problem Solving Approach

Authors: Luke M. Froeb, Brian T. McCann

1st Edition

0324359810, 9780324359817

More Books

Students also viewed these Economics questions

Question

Define personality and list the big five personality traits.

Answered: 1 week ago

Question

7. How can an interpreter influence the utterer (sender)?

Answered: 1 week ago