Macroeconomics + Economy 2009 Update 18th Edition by Campbell McConnell, Sean Masaki Flynn,Stanley Brue

Question

Macroeconomics + Economy 2009 Update 18th Edition by Campbell McConnell, Sean Masaki Flynn,Stanley Brue

Edition 18ISBN: 9780077354237

Macroeconomics + Economy 2009 Update 18th Edition by Campbell McConnell, Sean Masaki Flynn,Stanley Brue

Edition 18ISBN: 9780077354237

Exercise 1

Suppose you won $15 on a lotto ticket at the local 7-Eleven and decided to spend all the winnings on candy bars and bags of peanuts. The price of candy bars is $.75 and the price of peanuts is $1.50.
a. Construct a table showing the alternative combinations of the two products that are available.
b. Plot the data in your able as a budget line in a graph. What is the slope of the budget line What is the opportunity cost of one more candy bar Of one more bag of peanuts Do these opportunity costs rise, fall, or remain constant as each additional unit of the product is purchased.
c. How, in general, would you decide which of the available combinations of candy bars and bags of peanuts to buy
d. Suppose that you had won $30 on your ticket, not $15. Show the $30 budget line in your diagram. Why would this budget line be preferable to the old one

Explanation

Verified

a) The purchase options on candy bars and peanuts are shown in the table1.
$a) The purchase options on candy bars and peanuts are shown in the table1. At one extreme, the consumer can spend all $15 on candy bars and purchase 20 of them; at the other extreme, he can spend all on peanuts and purchase 10 . b) The budget line is a schedule or curve that shows various combinations of two products that a consumer can purchase with a specific money income. The above data can be plotted as budget line as shown in the graph below: The slope of the budget line measures the ratio of the price of candy bars P c to the price of peanuts P p ; the slope is: The budget line illustrates the idea of trade-offs arising from limited income. The straight line budget constraint, with its constant slope, indicates constant opportunity cost. This means that the opportunity cost of purchasing 1 extra peanut remains the same (2 candy bars) as more peanuts are purchased. Conversely, the opportunity cost of 1 extra candy bar remains the same (0.5 peanuts) as more candy bars are purchased c) The budget line is a schedule or curve that shows various combinations of two products a consumer can purchase with a specific money income. In the above graph also, each point on the graph represents a possible combination of candy bars and peanuts, including fractional quantities. d) The increase of income shifts the budget line to a higher level because the consumer can buy both of the two goods at higher quantity. The new budget line is shown in Figure 2, and the corresponding table of combinations is also shown in Table 2 below. In the table above, we find that the available combinations to purchase candy bars peanuts have increased. At one extreme, the consumer can spend all $30 on candy bars and purchase 40 of them; at the other extreme, he can spend all on peanuts and purchase 20 . Based on the above table, the budget line of peanuts candy bars has been drawn in the graph below:$ At one extreme, the consumer can spend all $15 on candy bars and purchase 20
$a) The purchase options on candy bars and peanuts are shown in the table1. At one extreme, the consumer can spend all $15 on candy bars and purchase 20 of them; at the other extreme, he can spend all on peanuts and purchase 10 . b) The budget line is a schedule or curve that shows various combinations of two products that a consumer can purchase with a specific money income. The above data can be plotted as budget line as shown in the graph below: The slope of the budget line measures the ratio of the price of candy bars P c to the price of peanuts P p ; the slope is: The budget line illustrates the idea of trade-offs arising from limited income. The straight line budget constraint, with its constant slope, indicates constant opportunity cost. This means that the opportunity cost of purchasing 1 extra peanut remains the same (2 candy bars) as more peanuts are purchased. Conversely, the opportunity cost of 1 extra candy bar remains the same (0.5 peanuts) as more candy bars are purchased c) The budget line is a schedule or curve that shows various combinations of two products a consumer can purchase with a specific money income. In the above graph also, each point on the graph represents a possible combination of candy bars and peanuts, including fractional quantities. d) The increase of income shifts the budget line to a higher level because the consumer can buy both of the two goods at higher quantity. The new budget line is shown in Figure 2, and the corresponding table of combinations is also shown in Table 2 below. In the table above, we find that the available combinations to purchase candy bars peanuts have increased. At one extreme, the consumer can spend all $30 on candy bars and purchase 40 of them; at the other extreme, he can spend all on peanuts and purchase 20 . Based on the above table, the budget line of peanuts candy bars has been drawn in the graph below:$ of them; at the other extreme, he can spend all on peanuts and purchase 10
$a) The purchase options on candy bars and peanuts are shown in the table1. At one extreme, the consumer can spend all $15 on candy bars and purchase 20 of them; at the other extreme, he can spend all on peanuts and purchase 10 . b) The budget line is a schedule or curve that shows various combinations of two products that a consumer can purchase with a specific money income. The above data can be plotted as budget line as shown in the graph below: The slope of the budget line measures the ratio of the price of candy bars P c to the price of peanuts P p ; the slope is: The budget line illustrates the idea of trade-offs arising from limited income. The straight line budget constraint, with its constant slope, indicates constant opportunity cost. This means that the opportunity cost of purchasing 1 extra peanut remains the same (2 candy bars) as more peanuts are purchased. Conversely, the opportunity cost of 1 extra candy bar remains the same (0.5 peanuts) as more candy bars are purchased c) The budget line is a schedule or curve that shows various combinations of two products a consumer can purchase with a specific money income. In the above graph also, each point on the graph represents a possible combination of candy bars and peanuts, including fractional quantities. d) The increase of income shifts the budget line to a higher level because the consumer can buy both of the two goods at higher quantity. The new budget line is shown in Figure 2, and the corresponding table of combinations is also shown in Table 2 below. In the table above, we find that the available combinations to purchase candy bars peanuts have increased. At one extreme, the consumer can spend all $30 on candy bars and purchase 40 of them; at the other extreme, he can spend all on peanuts and purchase 20 . Based on the above table, the budget line of peanuts candy bars has been drawn in the graph below:$ .
b) The budget line is a schedule or curve that shows various combinations of two products that a consumer can purchase with a specific money income. The above data can be plotted as budget line as shown in the graph below:
$a) The purchase options on candy bars and peanuts are shown in the table1. At one extreme, the consumer can spend all $15 on candy bars and purchase 20 of them; at the other extreme, he can spend all on peanuts and purchase 10 . b) The budget line is a schedule or curve that shows various combinations of two products that a consumer can purchase with a specific money income. The above data can be plotted as budget line as shown in the graph below: The slope of the budget line measures the ratio of the price of candy bars P c to the price of peanuts P p ; the slope is: The budget line illustrates the idea of trade-offs arising from limited income. The straight line budget constraint, with its constant slope, indicates constant opportunity cost. This means that the opportunity cost of purchasing 1 extra peanut remains the same (2 candy bars) as more peanuts are purchased. Conversely, the opportunity cost of 1 extra candy bar remains the same (0.5 peanuts) as more candy bars are purchased c) The budget line is a schedule or curve that shows various combinations of two products a consumer can purchase with a specific money income. In the above graph also, each point on the graph represents a possible combination of candy bars and peanuts, including fractional quantities. d) The increase of income shifts the budget line to a higher level because the consumer can buy both of the two goods at higher quantity. The new budget line is shown in Figure 2, and the corresponding table of combinations is also shown in Table 2 below. In the table above, we find that the available combinations to purchase candy bars peanuts have increased. At one extreme, the consumer can spend all $30 on candy bars and purchase 40 of them; at the other extreme, he can spend all on peanuts and purchase 20 . Based on the above table, the budget line of peanuts candy bars has been drawn in the graph below:$ The slope of the budget line measures the ratio of the price of candy bars P c to the price of peanuts P p ; the slope is:
$a) The purchase options on candy bars and peanuts are shown in the table1. At one extreme, the consumer can spend all $15 on candy bars and purchase 20 of them; at the other extreme, he can spend all on peanuts and purchase 10 . b) The budget line is a schedule or curve that shows various combinations of two products that a consumer can purchase with a specific money income. The above data can be plotted as budget line as shown in the graph below: The slope of the budget line measures the ratio of the price of candy bars P c to the price of peanuts P p ; the slope is: The budget line illustrates the idea of trade-offs arising from limited income. The straight line budget constraint, with its constant slope, indicates constant opportunity cost. This means that the opportunity cost of purchasing 1 extra peanut remains the same (2 candy bars) as more peanuts are purchased. Conversely, the opportunity cost of 1 extra candy bar remains the same (0.5 peanuts) as more candy bars are purchased c) The budget line is a schedule or curve that shows various combinations of two products a consumer can purchase with a specific money income. In the above graph also, each point on the graph represents a possible combination of candy bars and peanuts, including fractional quantities. d) The increase of income shifts the budget line to a higher level because the consumer can buy both of the two goods at higher quantity. The new budget line is shown in Figure 2, and the corresponding table of combinations is also shown in Table 2 below. In the table above, we find that the available combinations to purchase candy bars peanuts have increased. At one extreme, the consumer can spend all $30 on candy bars and purchase 40 of them; at the other extreme, he can spend all on peanuts and purchase 20 . Based on the above table, the budget line of peanuts candy bars has been drawn in the graph below:$ The budget line illustrates the idea of trade-offs arising from limited income. The straight line budget constraint, with its constant slope, indicates constant opportunity cost. This means that the opportunity cost of purchasing 1 extra peanut remains the same (2 candy bars) as more peanuts are purchased. Conversely, the opportunity cost of 1 extra candy bar remains the same (0.5 peanuts) as more candy bars are purchased
c) The budget line is a schedule or curve that shows various combinations of two products a consumer can purchase with a specific money income. In the above graph also, each point on the graph represents a possible combination of candy bars and peanuts, including fractional quantities.
d) The increase of income shifts the budget line to a higher level because the consumer can buy both of the two goods at higher quantity. The new budget line is shown in Figure 2, and the corresponding table of combinations is also shown in Table 2 below.
$a) The purchase options on candy bars and peanuts are shown in the table1. At one extreme, the consumer can spend all $15 on candy bars and purchase 20 of them; at the other extreme, he can spend all on peanuts and purchase 10 . b) The budget line is a schedule or curve that shows various combinations of two products that a consumer can purchase with a specific money income. The above data can be plotted as budget line as shown in the graph below: The slope of the budget line measures the ratio of the price of candy bars P c to the price of peanuts P p ; the slope is: The budget line illustrates the idea of trade-offs arising from limited income. The straight line budget constraint, with its constant slope, indicates constant opportunity cost. This means that the opportunity cost of purchasing 1 extra peanut remains the same (2 candy bars) as more peanuts are purchased. Conversely, the opportunity cost of 1 extra candy bar remains the same (0.5 peanuts) as more candy bars are purchased c) The budget line is a schedule or curve that shows various combinations of two products a consumer can purchase with a specific money income. In the above graph also, each point on the graph represents a possible combination of candy bars and peanuts, including fractional quantities. d) The increase of income shifts the budget line to a higher level because the consumer can buy both of the two goods at higher quantity. The new budget line is shown in Figure 2, and the corresponding table of combinations is also shown in Table 2 below. In the table above, we find that the available combinations to purchase candy bars peanuts have increased. At one extreme, the consumer can spend all $30 on candy bars and purchase 40 of them; at the other extreme, he can spend all on peanuts and purchase 20 . Based on the above table, the budget line of peanuts candy bars has been drawn in the graph below:$ In the table above, we find that the available combinations to purchase candy bars peanuts have increased. At one extreme, the consumer can spend all $30 on candy bars and purchase 40
$a) The purchase options on candy bars and peanuts are shown in the table1. At one extreme, the consumer can spend all $15 on candy bars and purchase 20 of them; at the other extreme, he can spend all on peanuts and purchase 10 . b) The budget line is a schedule or curve that shows various combinations of two products that a consumer can purchase with a specific money income. The above data can be plotted as budget line as shown in the graph below: The slope of the budget line measures the ratio of the price of candy bars P c to the price of peanuts P p ; the slope is: The budget line illustrates the idea of trade-offs arising from limited income. The straight line budget constraint, with its constant slope, indicates constant opportunity cost. This means that the opportunity cost of purchasing 1 extra peanut remains the same (2 candy bars) as more peanuts are purchased. Conversely, the opportunity cost of 1 extra candy bar remains the same (0.5 peanuts) as more candy bars are purchased c) The budget line is a schedule or curve that shows various combinations of two products a consumer can purchase with a specific money income. In the above graph also, each point on the graph represents a possible combination of candy bars and peanuts, including fractional quantities. d) The increase of income shifts the budget line to a higher level because the consumer can buy both of the two goods at higher quantity. The new budget line is shown in Figure 2, and the corresponding table of combinations is also shown in Table 2 below. In the table above, we find that the available combinations to purchase candy bars peanuts have increased. At one extreme, the consumer can spend all $30 on candy bars and purchase 40 of them; at the other extreme, he can spend all on peanuts and purchase 20 . Based on the above table, the budget line of peanuts candy bars has been drawn in the graph below:$ of them; at the other extreme, he can spend all on peanuts and purchase 20
$a) The purchase options on candy bars and peanuts are shown in the table1. At one extreme, the consumer can spend all $15 on candy bars and purchase 20 of them; at the other extreme, he can spend all on peanuts and purchase 10 . b) The budget line is a schedule or curve that shows various combinations of two products that a consumer can purchase with a specific money income. The above data can be plotted as budget line as shown in the graph below: The slope of the budget line measures the ratio of the price of candy bars P c to the price of peanuts P p ; the slope is: The budget line illustrates the idea of trade-offs arising from limited income. The straight line budget constraint, with its constant slope, indicates constant opportunity cost. This means that the opportunity cost of purchasing 1 extra peanut remains the same (2 candy bars) as more peanuts are purchased. Conversely, the opportunity cost of 1 extra candy bar remains the same (0.5 peanuts) as more candy bars are purchased c) The budget line is a schedule or curve that shows various combinations of two products a consumer can purchase with a specific money income. In the above graph also, each point on the graph represents a possible combination of candy bars and peanuts, including fractional quantities. d) The increase of income shifts the budget line to a higher level because the consumer can buy both of the two goods at higher quantity. The new budget line is shown in Figure 2, and the corresponding table of combinations is also shown in Table 2 below. In the table above, we find that the available combinations to purchase candy bars peanuts have increased. At one extreme, the consumer can spend all $30 on candy bars and purchase 40 of them; at the other extreme, he can spend all on peanuts and purchase 20 . Based on the above table, the budget line of peanuts candy bars has been drawn in the graph below:$ .
Based on the above table, the budget line of peanuts candy bars has been drawn in the graph below:
$a) The purchase options on candy bars and peanuts are shown in the table1. At one extreme, the consumer can spend all $15 on candy bars and purchase 20 of them; at the other extreme, he can spend all on peanuts and purchase 10 . b) The budget line is a schedule or curve that shows various combinations of two products that a consumer can purchase with a specific money income. The above data can be plotted as budget line as shown in the graph below: The slope of the budget line measures the ratio of the price of candy bars P c to the price of peanuts P p ; the slope is: The budget line illustrates the idea of trade-offs arising from limited income. The straight line budget constraint, with its constant slope, indicates constant opportunity cost. This means that the opportunity cost of purchasing 1 extra peanut remains the same (2 candy bars) as more peanuts are purchased. Conversely, the opportunity cost of 1 extra candy bar remains the same (0.5 peanuts) as more candy bars are purchased c) The budget line is a schedule or curve that shows various combinations of two products a consumer can purchase with a specific money income. In the above graph also, each point on the graph represents a possible combination of candy bars and peanuts, including fractional quantities. d) The increase of income shifts the budget line to a higher level because the consumer can buy both of the two goods at higher quantity. The new budget line is shown in Figure 2, and the corresponding table of combinations is also shown in Table 2 below. In the table above, we find that the available combinations to purchase candy bars peanuts have increased. At one extreme, the consumer can spend all $30 on candy bars and purchase 40 of them; at the other extreme, he can spend all on peanuts and purchase 20 . Based on the above table, the budget line of peanuts candy bars has been drawn in the graph below:$