What is maximum number of donuts that david can consume

Assignment Help Econometrics

Reference no: EM13212684

Desperate David devours (consumes) only donuts and dumplings. Every donut costs $1.00 and every dumpling costs $1.50. His monthly budget for these items is $100. His mom makes dumplings at home at gives him 30 dumplings free every month. His dad owns a donut shop and gives him 50 free donuts every month.

a. Assuming David can not sell the gifts from his parents, draw his budget line and show the co-ordinates of all the important points on this budget line!!

b. Assuming that David is rational and possesses convex indifference curves, draw a diagram to show his optimum point if he spends half of his budget on donuts and half on dumplings. Show the co-ordinates of his optimum points and indicate how many donuts and dumplings he will consume every month. At the optimum point, the marginal utility of a donut is K times the marginal utility of a dumpling. The value of K is ________

c. Assuming that David is rational and possesses convex indifference curves, draw a diagram to show his optimum point if he consumes exactly 50 donuts a month. Show that if this is his optimum point, then marginal rate of substitution is not necessarily equal to the ratio of prices and he may be better off selling some of the donuts that his father gives him as a gift!

d. Draw his budget line if he is able to sell the gifts he receives from his parents. In this case what is maximum number of donuts that he can consume?

Reference no: EM13212684

Questions Cloud

Explain 2-iodopropane with tetramethylammonium fluoride : Please consider the reaction of 0.22M 2-iodopropane with tetramethylammonium fluoride (TMAF) in DMSO to give propylene. The reaction rate in the presence of 0.1M TMAF is 0.002 M/s, but it is 0.0058 M/s in the presence of 1.2M TMAF.

Estimate the true proportion of students at the college : What sample size would be needed to estimate the true proportion of students at your college (if you are a student) who are wearing backpacks, with 95 percent confidence and an error of ± 0.04

How long will it take the puck to slow down to a speed : how long will it take the puck to slow down to a speed of 1m/s and how long will it take for the puck to stop completely? How far will the puck travel before it slows to 1m/s? You can assume the table is very very long.

What is the h30 in the final solution after mixing : What is the [H30+] in the final solution after mixing 0.500 L solution of 0.100M HbrO4(aq) with 0.600L of 0.010M solution of NaOH

What is maximum number of donuts that david can consume : Assuming that David is rational and possesses convex indifference curves, draw a diagram to show his optimum point if he consumes exactly 50 donuts a month. Show that if this is his optimum point, then marginal rate of substitution is not necessar..

Imagine the atoms to behave as hard spheres : Show that the spacing between (111) planes in the FCC structure is the same as the spacing (002) planes in the HCP structure. Imagine the atoms to behave as hard spheres.

Explain why the two measurements give different values : A similar measurement is made applying the force parallel to one of the cube axes. Explain why the two measurements give different values of the elastic modulus.

What is the reason for the change in enthalpy : what is the reason for the change in enthalpy between the throttle valve and the evaporator in a practical refrigeration cycle that is using R12 refrigerant.

Determine the values of q that minimizes unit sales : determine the values of Q that minimizes unit sales cost UC = TC/Q; and compute the annual profit earned by the plant at this quantity.

User Account

All Pages