: : Wridows RENT CONNECTED | - = e . mert 8 backspace 9 8 7 6 1 u'll P U Y Paragraph Styles Edi 2 3 5 6 7.18 9110 11 12 13 15 1. The current budget line for falafel() and melon (m) is f-20 - 49m, and the price of falafel is $5. If the price of falafel falls to $4, what is the new budget equation? ANSWER: 2. Let D-drink and F = falafel. A can of drink (D) costs $1.50 and a box of falafel (F) costs $6.00. At the equilibrium point, a consumer is on an indifference curve DXF = 4 (This is the utility function) with MRS - (-4/D). How much does the consumer spend on drink and falafel combined? ANSWER: Editi 2 Paragraph Styles 9110 11 12-13 14 15 16 17 2. Let Darink ana r = Talarei. A can or arinK (D) COSTS $1.50 and a box or talarei (F) costs $6.00. At the equilibrium point, a consumer is on an indifference curve DXF-4 (This is the utility function) with MRS-(-4/D2). How much does the consumer spend on drink and falafel combined? ANSWER: 3. Mazin's utility function is given by U = 2C*P, where C represents the number of cans of cola and P represents the number of pizzas. Also, MUp = 2C and MUC 2P. Suppose that I -$120, Pp = 4 and Pc = 2. Find the values of C and P that arise in consumer equilibrium. What is the total level of utility generated at this consumer equilibrium? ANSWER: 4. Assume a utility-maximization consumer with income I (and therefore a budget constraint of I = Pg G+Pk K) purchases pounds of G-oranges and pounds of K grapes such that G=10K. Given this information, K*- ANSWER: 5. Cake is on the horizontal axis and Pepsi is on the vertical axis in the consumer- choice diagram. Pc is the price of a slide of cake, Pp is the price of a can of Pepsi, and I is the consumer's income. Cake and Pepsi are the only two goods on which income is spent. Prices are $1.50 for a slide of cake and $6.00 for a can of Pepsi. The slope of the budget line is