economics questions

10. The price of DVDs (D) is $20 and the price of CDs (0) is $10. Philip has a budget of $100 to spend on the two goods. Suppose that he has already bought one DVD and one CD. In addition, there are 3 more DVDs and 5 more CDs that he would really like to buy. a. Given the above prices and income, draw his budget line on a graph with CDs on the horizontal axis. b. Considering what he has already purchased, and what he still wants to purchase, identify the three different bundles of CDs and DVDs that he could choose. For this part of the question, assume that he cannot purchase fractional units. 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? 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 6. Describe the equal marginal principle. Explain why this principle may not hold if increasing marginal utility is associated with the consumption of one or both goods. 8. Janelle and Brian each plan to spend $20,000 on the styling and gas mileage features of a new car. They can each choose all styling, all gas mileage, or some combination of the two. Janelle does not care at all about styling and wants the best gas mileage possible. Brian lilies both equally and wants to spend an equal amount on each. Using indj'erence curves and budget lines, illustrate the choice that each person will make