Gilberto is in a band and likes to advertise upcoming shows using flyers he posts around the city. Making one black-and-white flyer costs $0.02, and making a flyer in color costs $0.10. Gilberto budgets $20.00 for making flyers each month. The following graph shows three of Gilberto's indifference curves for the number of black-and-white and color flyers that he makes. Use the green line (triangle symbol) to plot Gilberto's budget line. Then, place the black point (plus symbol) on the graph to indicate Gilberto's consumer equilibrium given that budget line. BLACK-AND-WHITE FLYERS 1000 900 800 700 600 500 400 300 200 100 0 0 25 50 75 100 125 150 COLOR FLYERS +¹3 ¹¹/₂ ¹4₁ 175 200 225 250 Budget Line Consumer Equilibrium ? At the consumer equilibrium that you indicated on the graph, Gilberto's marginal rate of substitution is equal to per flyer in color. in black and white

Gilberto is in a band and likes to advertise upcoming shows using flyers he posts around the city. Making one black-and-white flyer costs $0.02, and making a flyer in color costs $0.10. Gilberto budgets $20.00 for making flyers each month. The following graph shows three of Gilberto's indifference curves for the number of black-and-white and color flyers that he makes. Use the green line (triangle symbol) to plot Gilberto's budget line. Then, place the black point (plus symbol) on the graph to indicate Gilberto's consumer equilibrium given that budget line. BLACK-AND-WHITE FLYERS 1000 900 800 700 600 500 400 300 200 100 0 0 25 50 75 100 125 150 COLOR FLYERS +¹3 ¹¹/₂ ¹4₁ 175 200 225 250 Budget Line Consumer Equilibrium ? At the consumer equilibrium that you indicated on the graph, Gilberto's marginal rate of substitution is equal to per flyer in color. in black and white

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter7: Consumer Choice: Maximizing Utility And Behavioral Economics

Section7.1: Utility Theory

Problem 3ST

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Shen is in a band and likes to advertise upcoming shows using flyers he posts around the city. Making one black-and-white flyer costs $0.05, and making a flyer in color costs $0.10. Shen budgets $25.00 for making flyers each month. The following graph shows three of Shen's indifference curves for the number of black-and-white and color flyers that he makes. Use the green line (triangle symbol) to plot Shen's budget constraint. Then, place the black point (plus symbol) on the graph to indicate Shen's optimal consumption choice given that budget constraint. 1000 900 Budget Constraint 800 700 600 Optimum 500 400 300 200 100 0 25 50 75 100 125 150 175 200 225 250 COLOR FLYERS BLACK-AND-WHITE FLYERS
Dmitri is in a band and likes to advertise upcoming shows using flyers he posts around the city. Making one black-and-white flyer costs $0.02, and making a flyer in color costs $0.10. Dmitri budgets $20.00 for making flyers each month. The following graph shows three of Dmitri's indifference curves for the number of black-and-white and color flyers that he makes. Use the green line (triangle symbol) to plot Dmitri's budget constraint. Then, place the black point (plus symbol) on the graph to indicate Dmitri's optimal consumption choice given that budget constraint. 1000 900 Budget Constraint 800 700 600 Optimum 500 400 300 200 + 100 0.2 flyers 1 flyer 25 50 75 100 125 150 175 200 225 250 COLOR FLYERS 5 flyers 17.5 flyers At the optimum that you indicated on the graph, Dmitri's marginal rate of substitution is equal to in black and white per flyer in color. BLACK-AND-WHITE FLYERS
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Latasha is in a band and likes to advertise upcoming shows using flyers she posts around the city. Making one black-and-white flyer costs $0.05, and making a flyer in color costs $0.10. Latasha budgets $25.00 for making flyers each month. The following graph shows three of Latasha's indifference curves for the number of black-and-white and color flyers that she makes. Use the green line (triangle symbol) to plot Latasha's budget constraint. Then, place the black point (plus symbol) on the graph to indicate Latasha's optimal consumption choice given that budget constraint. BLACK-AND-WHITE FLYERS 1000 900 800 700 600 500 400 300 200 100 0 0 25 50 75 100 125 150 175 200 225 250 COLOR FLYERS Budget Constraint Optimum ? At the optimum that you indicated on the graph, Latasha's marginal rate of substitution is equal to 2 flyers in black and white per flyer in color.
A consumer has a budget set aside for entertainment during the year, and they spend the budget on concerts and plays. The consumer has a strong preference for attending concerts over plays: the two activities are substitutes, but not very strong substitutes. Sketch the indifference curves for this consumer on a graph, with concert tickets on the vertical axis and play tickets on the horizontal axis. Briefly explain why the consumer might ultimately choose to purchase a large number of play tickets, even though they have a strong preference for concerts. Include a budget line on your graph to illustrate this case.
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Brenda wants to buy new car and has a budget of $25,000. She has just found a magazine that assigns each car an index for styling and an index for gas mileage. Each index runs from 1 to 10, with 10 representing either the most styling or best gas mileage. While looking at the list of cars, Brenda observes that on average, as the style index increases by one unit, the price of the car increases by $6,250. She also observed that as the gas-mileage index rises by one unit, the price of the car increases by $5,000. Illustrate the various combinations of style (S) and gas mileage (G) that Brenda could select with her $25,000 budget. Using the line drawing tool, illustrate Brenda's budget line. Label this line 'Budget Line'. Carefully follow the instructions above, and only draw the required object. Suppose Brenda's preferences are such that she always receives two times as much satisfaction from an extra unit of styling as she does from gas mileage. What type of car will Brenda choose?…
1. Pindyck and Rubinfeld (2018) Chapter 4 Appendix, Exercise #5 Jae has the following utility function: U(X,Y)= 20X+ 80Y – X² – 2Y?, where X is consumption of CDs, with a price of $1, and Y is consumption of movie videos, with a rental price of $2. Jae plans to spend $41 on both forms of entertainment. Determine the number of CDs and video rentals that will maximize Jae's utility. а.
Suppose Kate has a weekly budget of $24 to spend on seltzer water and peanut butter. Seltzer water is priced at $2 per case, and peanut butter is priced at $6 per jar. If Kate spends her entire $24 on seltzer water, she can buy jars of peanut butter. Use the blue line (circle symbol) to plot Kate's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the area that represents combinations of seltzer water and peanut butter that are affordable for Kate. Finally, place the black point (plus symbol) on the point on Kate's budget constraint that corresponds to a scenario in which Kate spends $12 on each good. Note: Dashed drop lines will automatically extend to both axes. PEANUT BUTTER (Jars) 24 22 20 18 16 14 10 4 2 0 0 + 2 + 6 8 10 12 14 16 SELTZER WATER (Cases) 18 cases of seltzer water. If she spends her entire $24 on peanut butter, she can buy 20 22 24 O BC, ($24) 0 Affordable Region + $12 on Each BC₂ ($48) (?)
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Paolo enjoys consuming both soda and coffee. Each can of soda costs Ps = $1, and each cup of coffee costs Pc = $2. Suppose that Paolo buys 75 cans of soda and 50 cups of coffee per month. The following graphs show his marginal utility curves for soda and coffee. At his current consumption level, Paolo's marginal utility from consuming the last can of soda he bought is MUS = 12 utils per can, and his marginal utility from consuming the last cup of coffee he bought is MUC = 12 utils per cup. 24 20 20 16 25 50 75 100 125 150 25 50 75 100 125 150 SODA (Cans) COFFEE (Cups) Is Paolo currently maximizing his utility? O No; he likes coffee and soda more than other goods, so he should buy more of both. O No; he could buy less soda and more coffee, not spend any more money, and be better off. O Yes; the marginal utility he receives from his last can of soda equals that of his last cup of coffee. O No; he could buy more soda and less coffee, not spend any more money, and be better off. MU OF SODA…
The table details the total utility that J.J. gets from going to see basketball and hockey games during a month. J.J. had $120 to spend. Calculate the marginal utility and the marginal utility per dollar spent for both basketball and hockey given that the price is $20 and $30 respectively. Based on your calculations: how many basketball games would he attend? how many hockey games would he attend?