Three individuals have $1000 and identical preferences for gum, g, and cigarettes, s, as measured by the utility function U(g,s)= 10g0.9s0.1. The price of gum is $9 and the price of cigarettes is $12. What is the market surplus/shortage at a price of $12 when the supply of cigarettes is 5?
What is the slope of the price consumption curve for two goods, x and y, when preferences are measured by the utility function U(x,y)= x0.5y0.5, the price of good y is $10, income equals $100, and the price of good x increases from $5 to $10?
The above figure shows Bobby's indifference map for juice and snacks. Also shown are three budget lines resulting from different prices for snacks assuming he has $20 to spend on these goods. Which of the following points are on Bobby's demand curve for snacks?
Draw two graphs, one directly above the other. On the upper graph, label the vertical axis Good X and label the horizontal axis Good Y. On the lower graph, label the vertical axis the Price of good Y and label the horizontal axis Good Y. In the upper graph, show the income and substitution effects of a decrease in the Price of good Y when Y is a Giffen good. Draw the corresponding demand curve for Good Y in the lower graph.
Suppose a graph is drawn to show a consumer's preferences for football tickets and basketball tickets. The quantity of football tickets is measured on the horizontal axis. If the price-consumption curve is horizontal when the price of football tickets changes, then
Ten individuals have $100 and identical preferences for picnics, p, and kayak trips, k, where U(p, k)= k0.5p0.5. The price of picnics is $5 and the price per kayak trip is $ 10. What is the shortage/surplus in the market when the supply of picnics totals 120?
Sandy derives utility from consuming "all other goods," g, and clean air (measured by particulate matter removed per m3), a, as measured by the utility function U(g,a)= g0.6a0.4. The price of "all other goods" is $20 and the price of clean air (abatement)equals $10. Brian is the only other consumer in the market for clean air and demands 10 units of clean air. What is the market demand for clean air?
The above figure shows Bobby's indifference map for juice and snacks. Also shown are three budget lines resulting from different prices for snacks assuming he has $20 to spend on these goods. Which of the following points are on Bobby's price-consumption curve?