What was the marginal rate of substitution at the optimal

Assignment Help Microeconomics
Reference no: EM13298958

Tony likes nuts (N) and berries (B). He has a monthly income of $200 to spend on these two goods. The price of nuts stays at $4 around the year because nuts are so easy to store, but the price of berries varies a lot. Last year the price of berries was $5 in August; but in December it reached $8.

a. Write the equations of Tony’s budget lines in August and in December. Graph these budget lines (put nuts on the y-axis and berries on the x-axis).

b. Being a rational consumer, at August prices Tony purchased 25 nuts. How many berries did he consume in August? What was the marginal rate of substitution at the optimal consumption bundle?

c. After three months of price growth, in December Tony consumed 20 nuts. What was his consumption of berries? What kind of goods are berries and nuts for Tony?

d. It is known that Tony’s demand for berries is linear. Using your answers to questions (b) and (c), derive his demand function.

Reference no: EM13298958

Questions Cloud

What are the merits and demerits of these two methods : Explain the difference between accounting rate of return and internal rate of return. What are the merits and demerits of these two methods?
What is the angular velocity of the bar : A 530.0g bird is flying horizontally at 2.20m/s, not paying much attention, when it suddenly flies into a stationary vertical bar, What is the angular velocity of the bar just after it is hit by the bird
Define a new potential heart medicine : A new potential heart medicine, code-named X-281, is being tested by a pharmaceutical company, Pharma-pill. As a research technician at Pharma-pill, you are told that X-281 is a monoprotic weak acid, but because of security concerns, the actual ch..
Calculate how high will the other ball go after collision : A 6.00kg ball is dropped from a height of 11.0m above one end of a uniform bar that pivots at its center. The bar has mass 7.50kg, How high will the other ball go after the collision
What was the marginal rate of substitution at the optimal : Being a rational consumer, at August prices Tony purchased 25 nuts. How many berries did he consume in August? What was the marginal rate of substitution at the optimal consumption bundle
What target volume must jac achieve to meet target profit : Jac's has a fixed cost for producing the joystick of $180,000 and expects it to have a contribution margin of $20. What target volume must Jac's achieve to meet the target profit?
How to calculate the grams of titanium that will be plated : Calculate the grams of Titanium that will be plated from a Ti(NO3)4 solution using a current of 15 amperes for 3 hours.
Compute the average power supplied by the child : A playground merry-go-round has radius 2.10m and moment of inertia 2200kg*m^2 about a vertical axle through its center, compute the average power supplied by the child
Determine how much area must the heat exchanger have : You have been assigned to design a heat exchanger to cool a gaseous process stream in a chemical plant. The stream flow at 20 kg/s and enters at 431 oK, It has a heat capacity of 3.45 J/g-oC , and needs to be cooled to 402 oK.

Reviews

Write a Review

Microeconomics Questions & Answers

  How much will you charge him for the of paper

Suppose that you are the only seller of paper in the market, and you know that John already has a printer, how much will you charge him for the (100 units of) paper?

  How is a peer group different from an aspirant group

Explain what peer group analysis means. As a financial manager, how could you use the results of peer group analysis to evaluate the performance of your firm How is a peer group different from an aspirant group

  How much will each firm produce in the equilibrium

How much will each firm produce in the equilibrium and find in the long run, consumer surplus

  What might pfizer hadid pfizer violate any ethical standards

In the 1990s, Pfizer, Inc., developed a new antibiotic called Trovan (trovafloxacin mesylate). Tests showed that in animals Trovan had life-threatening side effects, including joint disease, abnormal cartilage growth, liver damage and a degenerati..

  Theory of rational expectations

If growth in labor supply is a source of economic growth, then we should just open our borders and let everyone immigrate to the U.S. Agree or disagree? When it comes to labor what matters for economic growth?

  Prepare a memorandum of association under uae companies

A brief introduction of your company and reason for choosing this form of business organization and prepare a Memorandum of Association under UAE commercial companies law 1984 for your company

  Define annual yield

A bond with no expiration date has a face value of $10,000 and pays a fixed 10 percent interest. If the market price of the bond rises to $11,000, the annual yield approximately equals.

  What is the case in favor of fed independence

What factors explain the high degree of independence of the Fed? 5. What factors limit the independence of the Fed? 6. What is the case in favor of Fed independence? What is the case against Fed independence? 7. What is the theory of bureaucratic beh..

  Four types of market failure

Each instance which follows is an example of one of four types of market failure (imperfect market structure; the existence of public goods; the presence of external costs and benefits; and imperfect information).

  What is foreign aid and what is the goal of foreign aid

What is foreign aid and what is the goal of foreign aid? Does foreign aid promote economic development? Explain briefly. Your response should be at least 75 words in length.

  How much rice do domestic farmers produce in japan

What is the free trade level of rice consumption in Japan, how much rice do domestic farmers produce in Japan

  Determining average product of labor

If the production function is Q=K^.5 L^.5 and capital is fixed at 1 unit, then the average product of labor when L=36 is?

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