Reference no: EM133206018

Assignment:

The first question provides information you need to answer question 3 (DO NOT include question in the assignment)

1. Sam spends $6/wk on orange juice and apple juice. Orange juice costs $2/cup while apple juice costs $I/cup. Sam views 1 cup of orange juice as a perfect substitute for 3 cups of apple juice. Find Sam's optimal consumption bundle of orange juice and apple juice each week. Suppose the price of apple juice rises to $2/cup, while the price of orange juice remains constant. How much additional income would Sam need to afford his original consumption bundle?

2. Maureen has the same income and faces the same prices as Sam and Bruce, but Maureen views 1 cup of orange juice and 1 cup of apple juice as perfect complements. Find Maureen's optimal consumption bundle. How much additional income would Maureen need to afford her original consumption bundle when the price of apple juice doubles?

3. The market for lemonade has 10 potential consumers, each having an individual demand curve P = 101 - 10Q_i, where P is price in dollars per cup and Q_i is the number of cups demanded per week by the ith consumer. Find the market demand curve using algebra. Draw an individual demand curve and the market demand curve. What is the quantity demanded by each consumer and in the market as a whole when lemonade is priced at P = $ 1/cup?