Graph budget constraint for two goods-what is the slope

Assignment Help Business Economics

Reference no: EM131245985

Given the income equation: $150 = ($10 x Juice) + ($5 x Bread) and the utility function: U = (J^.75 B^.25)

a) Place Juice on x axis and Bread on y axis. Find both intercept points and solve for and graph a budget constraint for the two goods. What is the slope?

b) A friend of yours suggests that he will consume 6 units of Juice and 15 Units of Bread. What is wrong with this?

c) Define an indifference curve. What slop does it have? Why does this slope change and why is the curve bowed?

d) Calculate the indifference curve at the optimal levels of B and J and place on a graph. What exactly is going on at this point?

e) Using the numbers above, find the "consumer equilibrium condition or rule" and explain.

Reference no: EM131245985

Questions Cloud

Security system hires both male-female sales representatives : Olid Security Systems hires both male and female sales representatives. However, the company mostly promotes male employees to the position of senior sales executive because the job involves a lot of traveling. The management of the company believes ..

About the term structure of interest rates : Explain what typically happens to bond interest rates in US recessions. Use the demand and supply graph but clearly label any curve shifts and explain the reasons behind those shifts. How does the Segmented Markets theory explain the second fact abou..

Related lending market-asset-backed commercial paper : In 1998, the Syndicated Bank Loan market (defined as loans having more than two bank lenders) was a vast and cheap source of debt financing for U.S. corporations. Over the same time period, in a related lending market, asset-backed commercial paper, ..

Draw the change in supply and/or demand for the bonds : Beginning in 2008, economic conditions began to decline. Investors became unsure about the ability of private firms to repay outstanding obligations and it became difficult to tell high quality private investments from risky investments. draw the cha..

Graph budget constraint for two goods-what is the slope : Given the income equation: $150 = ($10 x Juice) + ($5 x Bread) and the utility function: U = (J.75 B.25) Place Juice on x axis and Bread on y axis. Find both intercept points and solve for and graph a budget constraint for the two goods. What is the ..

Identify the cost-minimizing labor–capital choice : A firm has the given isoquant for producing 100 units of output per hour. Given that labor costs a wage of $10 per hour and a unit of capital costs $20 per hour, identify the firm's optimal labor–capital choice to produce 100 units per hour. To do th..

Governments use to intervene in international trade : If living standards in a country, as measured by output per person, increase, then total output must have: What two main methods do governments use to intervene in international trade?

Gas prices dropping after last weeks spike : In an article titled, Gas prices dropping after last week's spike, that was published in The Atlanta Journal-Constitution newspaper on August 29, 2011, Mike Morris wrote: "After a spike last week as Hurricane Irene threatened East Coast oil refinerie..

What is the level of production : A Monopoly firm faces the following demand curve: P=200-0.5Q Where Q is the output and P is price in dollars. The firm's total cost function is given by TC=20,000 + 40Q 1. What is the level of production? 2. What is the price monopolist should charge..

User Account

All Pages