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Iggy only consumes two goods: coffee and cigarettes. Three cigarettes can be traded for one cup of coffee in a free market, or one cup coffee can be traded for three cigarettes. Iggy initially has 12 cigarettes and 5 cups of coffees.
a. Find an equation that gives every bundle of cigarettes and coffee that Iggy could trade for.
b. Iggy has a MRS = -5 when he is holding his initial bundles (cigs, coffee)=(12,5). Given the rate of exchange, would Iggy trade cigarettes for coffee, or coffee for cigarettes?
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Explain why this budget constraint but you cannot tell anything about the MRS at this point.
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Blake eats two bags of potato chips each day. Blake's hourly wage increases from $9 to $15, and he decides to stop eating generic chips and instead eats a name brand potato chip. Use the midpoint method to calculate Blake's income elasticity of deman..
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What is the biggest beneficiary of the primary market (of the multi-sided network effects) for the Windows Operating System?
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