Question 1 Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either call her on the land-line phone for ve cents per minute or he can drive to see her, at a round-trip cost of $2 in gasoline money. He has a total of $10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses a handy utilimometer that measures his total utility from personal visits and from phone minutes. Round Trips Total Utility Phone Minutes Total Utility 0 D 0 D 1 80 20 200 2 150 40 330 3 210 60 540 4 260 ED 630 5 300 100 300 6 330 120 900 7 200 140 930 B 180 150 1040 9 160 130 1030 H D 140 200 1100 a]: Using the values given in the table above, graph the points on Jeremy's consumption choice budget constraint. b] Use the marginal utility approach to identify the choice of phone minutes and round trips that maximize Jeremy's utility. Question 2 As a college student you work at a part-time job, but your parents also send you a monthly \"allowance." Suppose one month your parents forgot to send the check. a]: Show graphically how your budget constraint is affected. bl Assuming you only buy normal goods, what would happen to your purchases of goods? Question 3 Siddhartha has SCI hours per week to devote to work or leisure. He has been working for $8 per hour. Based on the information in the table below, calculate his utility-maximizing choice of labor and leisure time. Leisure Hours Total Utility Work Hours Income Total Utility 0 0 0 0 0 10 200 10 80 500 0 350 20 160 30 800 450 30 240 1040 40 500 40 320 50 1240 530 50 400 1400 Question 4 Josh budgets $200 per month for entertainment and eating out. He can spend $50 to eat out at a nice restaurant or $10 to watch a movie at a theatre. Draw his budget constraint under the following scenarios. a) As described above. b) If the price of movies changes from $10 to $20, but the cost of a meal remains the same. c) If the price of a meal changes from $50 to $25, but the cost of a movie remains the same. d) If a movie changes from $10 to $20 and a meal changes from $50 to $25.Question 5 Why does a change in income cause a parallel shift in the budget constraint? Question 6 In the labor-leisure choice model, what is the price of leisure? Question 7 Why do indifference curves slope down? Question 8 How many indifference curves does a person have? Question 9 How can you tell which indifference cu ryes represent higher or lower levels of utility
