Exam 1: Budget Constraint-Part A

Murphy used to consume 100 units of X and 50 units of Y when the price of X was $2 and the price of Y was $4.If the price of X rose to $4 and the price of Y rose to $9, how much would Murphy's income have to rise so that he could still afford his original bundle?

A decrease in income pivots the budget line around the bundle initially consumed.

This weekend, Martha has time to read 40 pages of economics and 30 pages of sociology.Alternatively, she could read 30 pages of economics and 50 pages of sociology.Which of these equations describes all combinations of pages of economics, E, and sociology, S, that she could read over the weekend?

If all prices double and income triples, then the budget line will become steeper.

If she spends all of her income on breadfruits and melons, Natalie can just afford 9 breadfruits and 10 melons per day.She could also use her entire budget to buy 3 breadfruits and 12 melons per day.The price of breadfruits is 8 yen each.How much is Natalie's income per day?

This weekend, Martha has time to read 40 pages of economics and 30 pages of sociology.Alternatively, she could read 10 pages of economics and 90 pages of sociology.Which of these equations describes all combinations of pages of economics, E, and sociology, S, that she could read over the weekend?

Suppose that the price of good x triples and the price of good y doubles while income remains constant.On a graph where the budget line is drawn with x on the horizontal axis and y on the vertical axis, the new budget line

Suppose there are two goods, the prices of both goods are positive, and a consumer's income is also positive.If the consumer's income doubles and the price of both goods triple,

If there are two goods and if one good has a negative price and the other has a positive price, then the slope of the budget line will be positive.

Bella's budget line for x and y depends on all of the following except

In year 1, the price of good x was $4, the price of good y was $1, and income was $70.In year 2, the price of x was $9, the price of good y was $2, and income was $70.On a graph with x on the horizontal axis and y on the vertical, the new budget line is

Murphy used to consume 100 units of X and 50 units of Y when the price of X was $2 and the price of Y was $4.If the price of X rose to $3 and the price of Y rose to $8, how much would Murphy's income have to rise so that he could still afford his original bundle?

There are two goods.You know how much of good 1 a consumer can afford if she spends all of her income on good 1.If you knew the ratio of the prices of the two goods, then you could draw the consumer's budget line without any more information.

The Chuzzlewits have an income of $m per week.Let x be food and let y be all other goods.Let p_x be the price of food and p_y be the price of other goods.They can use food stamps to buy food at a price of p_x(1 - s)for up to x* units of food per week.If they buy more food than x*, they have to pay the full price p_x for additional units.Their weekly income is greater than p_x(1 - s)x*.The maximum amount of food that they can buy per week is

If good 1 is measured on the horizontal axis and good 2 is measured on the vertical axis and if the price of good 1 is p₁ and the price of good 2 is p₂, then the slope of the budget line is -p₂/p₁.

Perry lives on avocados and beans.The price of avocados is $10, the price of beans is $5, and his income is $40.Show Perry's budget line on a graph with avocados on the horizontal axis and beans on the vertical axis.Label the point where the budget line hits the horizontal axis A and the point where the budget line hits the vertical axis B.Next to these labels, write down the number of avocados purchased at A and the number of beans purchased at B.Draw another budget line showing what Perry's budget would be if his income doubled, the price of avocados doubled, and the price of beans stayed the same.Label the point where this line hits the vertical axis C and the point where it hits the horizontal axis D.Next to these labels write the number of avocados at C and the number of beans at D.

In the economy of Mungo, discussed in your workbook, there is a third person called Ike.Ike has a red income of 92 rcus and a blue income of 20 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

Your budget constraint for the two goods A and B is 12A + 4B = I, where I is your income.You are currently consuming more than 27 units of B.In order to get 3 more units of A, how many units of B would you have to give up?

Ads in a slick business magazine are read by 300 lawyers and 1,000 M.B.A.s.Ads in a consumer publication are read by 250 lawyers and 300 M.B.A.s.If Harry had $3,750 to spend on advertising, the price of ads in the business magazine were $500, and the price of ads in the consumer magazine were $250, then the combinations of M.B.A.s and lawyers whom he could reach with his advertising budget would be represented by the integer values along a line segment that runs between the two points

If you could exactly afford either 4 units of x and 24 units of y, or 9 units of x and 4 units of y, then if you spent all of your income on y, how many units of y could you buy?