User Account

All Pages

Draw babsie budget constraint

Assignment Help Business Economics
Reference no: EM132078730

Question #1: Babsie is a daughter related to Ronald Blump who is a wealthy billionaire. She only consumes Chanel 5 (perfume) and sushi. Suppose the price of a one sushi is $10, the price of a bottle of Chanel 5 is $15, and she has an income of $200. Her father provides her the allowance each month.

  1. Draw Babsie's budget constraint. Show which bundles are in her feasible set and which are not. Briefly discuss what the slope and intercepts of the budget constraint mean.
  2. Suppose that the government imposes a 100% tax on Chanel 5 so the price to Roland rises to $30 per bottle. Show how her budget constraint changes. Discuss what happened to her feasible set. Is she likely to care that the price has risen?

Question #2: Suppose the return on a one year bond from Ford Motor is given by the following table:

Probability

Rate of Return

0.1

1%

0.7

15%

0.2

3%

a. Does this probability distribution satisfy the characteristics of a probability distribution?

b. What is the expected return on this bond? Show your work!!

c. How does the expected utility differ from an expected return? Explain

Question#3:The following is a graph of Albert's Sweet Potato Farm located in Bensenville, Arkansas which is a perfectly competitive firm.

Answer the following questions based on this graph:

a. What is the profit maximizing price for this firm? Profit maximizing output?

b. Will Albert's Sweet Potato Farm earn a profit? Explain.

c. If Albert's Sweet Potato Farm is earning a profit, how much profit is being earned?

d. What is the amount of marginal revenue? Average revenue?

e. What is the amount of average total cost (ATC)?

f. How much total profit is being earned by Albert's Sweet Potato Farm? Total cost?

g. What are the characteristics for a perfectly competitive firm? Just list them.

Question #4: Short Answer Questions-please answer the following questions

a. If themarginal revenue is less than the marginal cost, what should a profit maximizing company do?

b. In a perfectly competitive graph, how does one calculate the economic profit?

c. What it is the shutdown point in a perfectly competitive firm?

d. Briefly what is the difference between economies of scale and diseconomies of scale? Why is it important to the firm?

e. Given the following total cost functionTC(q) = 1000 + 13q. Find the fixed cost, variable cost, average total cost, and the marginal cost. How do you know that these costs are in the short-run? Explain.

Reference no: EM132078730

Questions Cloud

Original uber operating model exploit : What economic inefficiencies does the original Uber operating model exploit? How does your answer change for drivers who rent cars to provide Uber services?
What are the challenges in implementing a global alliance : What are the challenges in implementing a global alliance. Once an alliance is reached, what steps are involved in strategic implementation of the venture?
Employment brand is a marketing approach to recruiting : Recall that an Employment Brand is a marketing approach to recruiting, retaining and engaging employees.
Describe the art of negotiation in a global situation : Describe the art of negotiation in a global situation. What are the stages of negotiation and what role do styles of negotiation play.
Draw babsie budget constraint : Draw Babsie's budget constraint. Show which bundles are in her feasible set and which are not. Briefly discuss what the slope and intercepts of the budget
The recent scandals in hollywood and associated firings : Given the recent scandals in Hollywood and associated firings, do you think companies should have stronger policies or take more immediate action
Market versus managed economy : Throughout the course we have come across a battle of ideas - should the unrestrained market dictate how individuals interact, or should the rules
Why some argue that the optimal capital structure : Discuses why some argue that the optimal capital structure involves using as much debt as possible when investing in real estate.
What are the client final and interim deliverables : What are the client’s final and interim deliverables?

Reviews

Write a Review

Business Economics Questions & Answers

  About both monopolistic competition and monopolies

Which of the following statements are true about both monopolistic competition and monopolies?

  Manufactures a variety of household products

Parker Products manufactures a variety of household products. The company is considering introducing a new detergent. The company’s CFO has collected the following information about the proposed product. What is the net present value of the proposed ..

  What happens to investment spending in response

Using the investment demand curve, what happens to investment spending in response to an increase in technology and how do I graph that?

  Principal place of business and is incorporated

Elle is walking to work along a sidewalk next to a road. A truck owned by Fast Distribution Company (FDC) strikes and injures Elle, causing her injuries that result in more than $250,000 in medical expenses. Elle is a resident of Georgia, where the a..

  Investors interested in eurodollar interest rate futures

Why are investors interested in eurodollar interest rate futures and/or interest rate options? How do these instruments relate to financial risk? How might they be used in conjunction with exchange rate derivatives?

  Bad driver expected utility without insurance

Good drivers have a 20% chance, and bad drivers have a 50% chance, of getting into an accident. A car is worth $900, and an accident would reduce its value to $400. Both types of drivers have utility U = (car value)0.5. What is a bad driver's expe..

  Stabilize the economy with soaring stock market

On well-labeled AD-AS diagrams, please show how the following events affect output and overall price level and explain intuitively. What could the federal government and the Federal Reserve do to stabilize the economy with a soaring stock market? A s..

  Average total costs of producing an individual income tax

Suppose that a firm’s long-run average total costs of producing an individual income tax return is $75 when it produces 1,000 returns and $75 when it produces 1,200 returns. For this range of output, the firm is experiencing

  What will happen in the market for coffee

Show in a graph, one for each question, what will happen (if anything) in the market for coffee when each of the following happens:

  Explain how this article relates to firm production and cost

Find an article on firm's production and cost from a major news media by providing title, date, source and summary of the article. Explain how this article relates to firm production and cost.

  Expected to last only for the guarantee period.

Jean believes the batteries can be expected to last only for the guarantee period. She does not want to invest extra money in a battery unless she can expect a 50% rate of return. If she plans to keep her present car another 2 years, which battery sh..

  Definition of representative and constitutional democracy

A brief working definition of representative democracy, constitutional democracy, and republic forms of government. Then, explain how these concepts impact contemporary democratic governance. Provide specific examples to illustrate your points.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd