Illustrate the new budget constraint

Reference no: EM137624

Q. a. Fill in the figures for marginal utility and marginal utility per dollar for both movies and books.

b. Are these preferences consistent with the law of diminishing marginal utility? Explain in brief.

c. Given the budget of $80, what quantity of books and what quantity of movies will maximize Joe's level of satisfaction? Explain briefly.

d. Draw the budget constraint (with books on the horizontal axis) and identify the optimal combination of books and movies as point A.

e. Now assume the price of books falls to $ 10. Which of the columns in the table must be recalculated? Do the required recalculations.

f. After the price change, how several movies and how many books will Alexandr purchase?

g. illustrate the new budget constraint and identify the new optimal combination of books and movies as point B.

h. If you calculated correctly, you found that a decrease in the price of books caused Alexandr to purchase more movies as well as more books. How can this be?

Reference no: EM137624

Questions Cloud

What is the range of body fat : If the ideal percent body fat for an acceptable male is 18-24 percent. If a male student weighs 190 pounds, what is the range of body fat (in pounds) needed to match the ideal.

What tax revenue will be generated. : Illustrate that the tax be acceptable in spite of the deadweight loss. What tax revenue will be generated.

Discuss and list the three discounted cash flow methods : An alternative to traditional equity and debt financing is leasing. Leasing is undertaken primarily for what purposes.Examine two major types of leases.

Elucidate what affect does a high level of inflation : How macroeconomic equilibrium does an economy achieve. Elucidate what affect does a high level of inflation have on macroeconomic equilibrium.

Illustrate the new budget constraint : If you calculated correctly, you found that a decrease in the price of books caused Alexandr to purchase more movies as well as more books. How can this be.

Consider a wide range of careers : Assume that society changed as well as encouraged both young women as well as young men to consider a wide range of careers.

Fema creates several mechanisms for communicating : The Federal Emergency Management Agency (FEMA) creates several mechanisms for communicating with the public. Read Are You Ready? An In-depth Guide to Citizens Preparedness on the FEMA website, and watch the series of videos on preparedness that are i..

Number of boat makers in the long run : What happens to the profits of boat makers in the short run. What happens to the number of boat makers in the long run.

The inside diameter of a 3-inch stainless steel tube : A 10 kg batch of food product has a moisture content of 175% dry basis. Calculate the amount of water to be removed from the product to decrease the moisture content to 15 percent wet basis.

User Account

All Pages