User Account

All Pages

Opportunity cost of a healthy meal

Assignment Help Macroeconomics
Reference no: EM131114879

Suppose your family's monthly grocery budget is $350. You can use it to by junk food meals for $5/meal or healthy food meals for $7/meal.

  1. Draw a budget constraint (BC1) for your family's monthly grocery decision. Label the axes clearly.
  2. What is the opportunity cost of a healthy meal?
  3. Label the initial consumption point C1 (on the budget constraint) indicating that the family decides to spend half of its budget on healthy food and half on junk food.
  4. Suppose the price of healthy food drops to $5/meal. Draw the new budget constraint (BC2) next to the old one.
  5. What is the new opportunity cost of health food?
  6. Suppose the family responds to this price change by eating more healthy-food meals, increasing to 50 healthy food meals (you will have to adjust consumption of junk food now). Show C2 on the new budget constraint.
  7. On a new graph, show the family's demand curve for healthy meals, derived from the change in prices. This graph must be clearly labelled and show how a price change affect the change in quantity demanded.
  8. Describe the likely income- and substitute effects for their healthy-eating behavior.
  9. Is healthy food a Giffen good here?

Suppose a poor family in China has $10 for food per month. They can purchase rice for calories (to stay alive) or meat for taste. The price of rice is $1/pound and the price of meat is $5/pound.

  1. Draw the budget constraint (BC1) for this family.
  2. Suppose they typically consume 9 pounds of rice. Show this point on the BC as C1.
  3. Suppose a non-profit organization starts giving out rice coupons, cutting the price of rice to $0.75/pound. Show the new budget constraint (BC2) next to the old one.
  4. Suppose the family responds by buying 1 pound of meat. Show C2 on the new budget constraint. How much rice do they eat now (show on graph).
  5. On a new graph, show the family's demand curve for rice, derived from the change in prices.
  6. Describe the likely income and substitute effects for their rice-eating behavior.
  7. Is rice a Giffen good here?

Reference no: EM131114879

Questions Cloud

Who are the participants in restorative justice : Who are the participants in restorative justice? In a well-written paper, compare the stakeholders in traditional justice with those whose roles are crucial in restorative justice practices.
Determine the rotor current frequency in hz : The speed of the rotor rotating magnetic field with respect to the stator rotating magnetic field in r/min.
Small firms are more likely to outperform large firms : What particular types of innovation activities exist for which large firms are likely to outperform small firms? What types exist for which small firms are more likely to outperform large firms? What are some advantages and disadvantages of collabora..
What strategies would you employ to improve the usefulness : What strategies would you employ to improve the usefulness of business meetings? Incorporate two or more of the strategic considerations for meetings outlined in Chapter 13 of your textbook in your response.
Opportunity cost of a healthy meal : Draw a budget constraint (BC1) for your family's monthly grocery decision. Label the axes clearly. What is the opportunity cost of a healthy meal?
What is needed to implement each marketing strategy : For starting up a new "APP" company, what is needed to IMPLEMENT each marketing strategy and identifying the individuals(or office) responsible for the completion of each task. Below the Marketing Manager we have the Sales Representative. What are th..
Problem regarding the value of michael capital : The market value of some of his older servers fell by $100,000. What was Michael's gross investment, depreciation, and net investment during 2015? What is the value of Michael's capital at the end of 2015?
Word sustainability used in popular news outlets : You’ve heard the word sustainability used in popular news outlets. It is a topic about which much has been written over the past few years; it has been studied academically, and the practice of business in the marketplace has been examined. Is it a f..
Discuss racism towards aboriginal australians still exists : 'Racism towards Aboriginal Australians still exists today'. Discuss.

Reviews

Write a Review

Macroeconomics Questions & Answers

  Inflation targeting be a good policy

Why might it be difficult for the Fed to formally adopt inflation targeting?  Would inflation targeting be a good policy for the Fed in the present economic environment

  In using the taylor rule

In using the Taylor Rule as a guideline for monetary policy, what are the pros and cons of using forecasted values of inflation and output rather than observed values of these variables?

  Describe the present economic crisis situation in europe

Describe the present economic crisis situation in Europe.  Why has it been so difficult for the Europeans to find a solution to this problem?   Comment on what implications the crisis may have for the rest of the world if Europeans are not able to ag..

  Long-term federal government budget problems

Question:. Explain why there are long-term Federal government budget problems. Explain why the base-line forecast of the CBO is misleading.

  Derive and compare demand curve

Question based on Derive and compare demand curve,  Derive Ambrose's demand function for peanuts. How does it compare with Johnny's demand curve for peanuts?

  Problem based on utility function

Problem based on  Utility Function - Problem,  Answer and explain the following using a diagram which is completely labeled.

  Laffer curve : tax rate and tax revenue

Question based on Laffer Curve : Tax Rate and Tax Revenue,  Do raising tax rates necessarily raise tax revenue? What factors affect how tax revenue changes when tax rates change?

  Problem - income elasticity of demand

Problem - Income Elasticity of Demand,  Interpret the following Income Elasticities of Demand (YED) values for the following and state if the good is normal or inferior; YED= +0.5 and YED= -2.5

  Positive balance of payment

Question Positive Balance of Payment: "Things will look good for the US if we could just get to where we are consistently running a positive Balance of Payments."

  Effect of recession on the investment curve

Comment on the effect of a recession on the investment curve (only) and on the level of savings, investment, and the equilibrium real interest rate in the financial crisis that hits United States first starting in fall 2007.

  Affect of falling domestic investment on trade surplus and

How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world.

  Crises in the banking sector and bank run

Banking crises crisis decreases depositors' confidence in the banking system. What would be the effect of a rumor about a banking crisis on checkable deposits in such a country?

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