Exam 1: Budget Constraint-Part A

Edmund must pay $6 each for punk rock video cassettes, V.If Edmund is paid $24 per sack for accepting garbage, G, and if his relatives send him an allowance of $96, then his budget line is described by the equation

Georgina thrives on two goods: pears and bananas.The cost of pears is 30 pesos each and the cost of bananas is 15 pesos each.If her income is 180 pesos, how many pears can she buy if she spends all of her income on pears?

Billy Bob wants to gain some weight so that he can play football.Billy consumes only milk shakes and spinach.Milk shakes cost him $1 each and spinach costs $2 per serving.A milk shake has 850 calories and a serving of spinach has 200 calories.Billy Bob never spends more than $20 a day on food and he always consumes at least 8,000 calories per day.Which of the following is necessarily true?

If she spends her entire budget, Betsy can afford 74 peaches and 9 pineapples.She can also just afford 14 peaches and 21 pineapples.The price of peaches is 17 cents.What is the price of pineapples in cents?

Lars consumes only potatoes and herring.When the price of potatoes was 9 crowns per sack and the price of herring was 5 crowns per crock, he spent his entire income to buy 5 sacks of potatoes and 10 crocks of herring per month.Now the government subsidizes potatoes.Market prices haven't changed, but consumers get a subsidy of 5 crowns for every sack of potatoes consumed.To pay for this subsidy, the government introduced an income tax.Lars pays an income tax of 20 crowns per month.If s is the number of sacks of potatoes and c is the number of crocks of herring, what is Lars's new budget equation?

Young Alasdair loves lollipops and hates oatmeal.To induce him to eat enough oatmeal and to restrain him from eating too many lollipops, his mum pays him 10 pence for every quart of oatmeal that he eats.The only way that he can get lollipops is to buy them at the sweet shop, where lollipops cost 5 pence each.Besides what he earns from eating oatmeal, Alasdair gets an allowance of 10 pence per week.If Alasdair consumes only oatmeal and lollipops and if his consumption bundles are graphed with quarts of oatmeal on the horizontal axis and lollipops on the vertical axis, then Alasdair's budget line has a slope

Your budget constraint for the two goods A and B is 8A + 4B = I, where I is your income.You are currently consuming more than 18 units of B.In order to get 3 more units of A, how many units of B would you have to give up?

Ed Moore and his family live in a city with many private schools and one public school.The Moores are thinking of sending their only child to private school because they would like a school that has more teachers and other resources per student than the local public school.The Moores must pay taxes to support local public schools whether or not their child goes to private school.There is such a variety of private schools that the Moores can get just about any level of inputs per student by choosing the appropriate private school.Tuition in the private schools equals expenditure per student.Draw a diagram to show the Moores' budget constraint.Put expenditures per student in the child's school on the horizontal axis and other goods on the vertical.

If all prices are doubled and money income is left the same, the budget set does not change because relative prices do not change.

Isabella thrives on two goods: lemons and tangerines.The cost of lemons is 40 guineas each and the cost of tangerines is 20 guineas each.If her income is 320 guineas, how many lemons can she buy if she spends all of her income on lemons?

If you have an income of $40 to spend, commodity 1 costs $2 per unit, and commodity 2 costs $10 per unit, then the equation for your budget line can be written

If there are two goods with positive prices and the price of one good is reduced, while income and other prices remain constant, then the size of the budget set is reduced.

A consumer prefers more to less of every good.Her income rises, and the price of one of the goods falls while other prices stay constant.These changes must have made her better off.

Deadly Serious, II, studying for his M.B.A., consumes only two goods, Wheaties and pens.Each pen costs $1.Each box of Wheaties costs $2 but has a free pen inside.Pens can be discarded at no cost.If we draw Serious's budget set with pens plotted on the horizontal axis, then his budget set will be bounded by two line segments with slopes

Harold lives on Doritos and seafood salads.The price of Doritos is 1 dollar per bag and the price of seafood salads is 2 dollars each.Harold allows himself to spend no more than 11 dollars a day on food.He also restricts his consumption to 6,500 calories per day.There are 1,500 calories in a bag of Doritos and 500 calories in a seafood salad.If he spends his entire money budget each day and consumes no more calories than his calorie limit, he can consume up to

Eduardo spends his entire income on 9 sacks of acorns and 4 crates of butternuts.The price of acorns is 6 dollars per sack and his income is 90 dollars.He can just afford a commodity bundle with A sacks of acorns and B crates of butternuts that satisfies the budget equation

In the economy of Mungo, discussed in your workbook, there is a third person called Ike.Ike has a red income of 94 rcus and a blue income of 25 bcus.(Recall that red prices are 2 rcus [red currency units] per unit of ambrosia and 6 rcus per unit of bubble gum.Blue prices are 1 bcu [blue currency unit] per unit of ambrosia and 1 bcu per unit of bubble gum.You have to pay twice for what you buy, once in red currency and once in blue currency.)If Ike spends all of his blue income but not all of his red income, then he consumes

Clara spends her entire budget and consumes 5 units of x and 13 units of y.The price of x is twice the price of y.Her income doubles and the price of y doubles, but the price of x stays the same.If she continues to buy 13 units of y, what is the largest number of units of x that she can afford?

While traveling abroad, Tammy spent all of the money in her purse to buy 5 plates of spaghetti and 6 oysters.Spaghetti costs 8 units of the local currency per plate and she had 82 units of currency in her purse.If s denotes the number of plates of spaghetti and o denotes the number of oysters purchased, the set of commodity bundles that she could just afford with the money in her purse is described by the equation

There are 3 goods.The price of good 1 is -1, the price of good 2 is +1, and the price of good 3 is +2.It is physically possible for a consumer to consume any commodity bundle with nonnegative amounts of each good.A consumer who has an income of 10 could afford to consume some commodity bundles that include 5 units of good 1 and 6 units of good 2.