What is greta marginal rate of substitution

Assignment Help Macroeconomics
Reference no: EM132471648

Greta is a vegan who loves to make veggie burgers from assorted vegetables and beans. Greta's preferences for protein sources include Lentils (L) and Tofu (T), and are represented by the utility function U = 2L + 6T. Both L and T are measured in KG. Suppose that Greta has $50 to spend on food this week. The grocery store is advertising prices per kg of PL =$4.50 and PT =$12.00

(a) What is Greta's Marginal Rate of Substitution? what kinds of goods Greta considers these to be?

(b) Draw a graph (with L on the horizontal axis, and T on the vertical axis). Draw Greta's budget line, and Greta's optimal bundle (choice of quantities of L and T). Also draw the indifference curve that represents Greta's utility when choosing the optimal bundle.

(c) Greta is paying for food at the farmer's market when the wind picks up, blowing $10 from her hand. How did Greta's budget constraint change? Draw a new graph depicting the change, label the slope and intercepts of the budget constraint.

(d) If Greta has to choose a new optimal bundle after losing the $10, how would the mixture of the two goods he chooses change?

Reference no: EM132471648

Questions Cloud

What are the major factors causing a shift in aggregate : What are the major factors causing a shift in aggregate demand (inward or outward)? What are the major factors that will affect short-run aggregate supply?
How the audit procedure of confirmation is least appropriate : How The audit procedure of confirmation is least appropriate with respect to The trustee of an issue of bonds payable. Holders of common stock.
COSC2531 Programming Fundamentals Assignment : COSC2531 Programming Fundamentals Assignment Help and Solution, RMIT University - Assessment Writing Service - develop your programming and problem solving
Write down the budget constraints of the consumer : (a) Write down the budget constraints of the consumer and the government for each alternative tax instrument.
What is greta marginal rate of substitution : What is Greta's Marginal Rate of Substitution? what kinds of goods Greta considers these to be?
Determine the valuation of year-end accounts payable : Determine the valuation of year-end accounts payable is most likely addressed by Examination of cash disbursements immediately prior to year-end.
Why countries engage in international trade : Why countries engage in international trade and how that country aligns with the PPF concept.
What is the inflation rate-define and provide data : What is the inflation rate (Define and provide data)? How is inflation measured? Is inflation a worry, or are we in a period of stable prices?
How client compliance with debt provisions is important : Consideration of client compliance with debt provisions is important to an audit is that violation of such debt provisions may affect the total recorded

Reviews

Write a Review

Macroeconomics Questions & Answers

  Program that prompts cashier to enter all prices and names

Write a program that prompts the cashier to enter all prices and names, adds them to two array lists, calls the method that you implemented, and displays the results. Use a price of 0 as a sentinel.

  Tradeoff between risk and return of financial investments

Why would one's desired tradeoff between risk and return of financial investments vary over one's lifetime?

  What lessons they learned about the us economy

What lessons they learned about the U.S. economy of the past 30 years. Sketch a production possibilities frontier for the years 1982 and 1983, showing the trade-off between public sector and private-sector (civilian) spending.

  Calculate the multiplier and the level of equilibrium income

Calculate the multiplier and the level of equilibrium income and calculating the budget surplus

  Describe the expected amount of dollars to be paid

Describe the expected amount of dollars to be paid by the Wake Forest Co. for the pesos in one year.

  Was keynes right or wrong from his theory

In 1936, Keynes published The General Theory of Employment, Interest, and Money, Was Keynes right or wrong from his theory

  How the two economies respond differently to a boom

Explain how the two economies respond differently to a boom and to a slump. What are some factors that might influence the slope of the Phillips curve? Do you think the slope of the Phillips curve has changed over time in the U.S. economy? Consider..

  Determine which were important and which were not

Like Supermarkets, full service department stores like Macys are generally in decline. What factors might these type of stores have in common behind their declines How would you determine which were important and which were not

  Why are financial institutions required to keep reserves

Describe two types of specialization in production. What are the economic advantages of specialization and what are political business cycles, and how could they be created?

  Effort to control exchange rates

Describe when and why central banks buy either their own currency or the currency of another nation in an effort to control exchange rates.

  How is the tax incidence split between workers and firms

Suppose that after the tax is imposed, the wage rate rises to $12.00 an hour and that only 8,000 workers are employed. How is the tax incidence split between workers and firms?

  Open market operations monetary policy

Assume that the federal reserve wishes to keep nominal interest rate at a target level of 5 percent. Draw a money supply and demand diagram in which the current equilibrium interest rate is 5%.

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!

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