economics questions

1. Jon is always willing to trade one can of Coke for one can of Sprite, or one can of Sprite for one can of Coke. a. What can you say about J on's marginal rate of substitution?| 1). Draw a set of indifference curves for Jon. c. Draw two budget lines with different slopes and illustrate the satisfaction maximizing choice. What conclusion can you draw? 2. Draw a budget line and then draw an indifference curve to illustrate the satisfaction maximizing choice associated with two products. Use your graph to answer the following questions. a. Suppose that one of the products is rationed. Explain why the consumer is likely to be worse off. b. Suppose that the price of one of the products is xed at a level below the current price. As a result, the consumer is not able to purchase as much as she would like. Can you tell if the consumer is better off or worse off? 3. The price of computers has fallen substantially over the past two decades. Use this drop in price to explain Why the Consumer Price Index is likely to overstate substantially the cost-ofliving index for individuals who use computers intensively. 4- In this chapter, consumer preferences fer various commodities did not change during the analysis. Yet in some situations, preferences do change as consumption occurs. Discuss why and how preferences might change over time with consumption of these two commodities: a. cigarettes b. dinner for the rst time at a restaurant with a special cuisine 5. Based on his preferences, Bill is willing to trade 4 movie tickets for 1 ticket to a basketball game. If movie tickets cost $8 each and a ticket to the basketball game costs $40, should Bill make the trade? Why or why not