Principles of Microeconomics
7th Edition
ISBN: 9781305156050
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 21.1, Problem 1QQ
To determine
The budget constraint of a person and its slope.
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A consumer has income of $3,000. Wine costs $3 a glass, and cheese costs $6 a pound. Draw the consumer’s budget constraint. What is the slope of this budget constraint?
A consumer has income of $3,000. Wine costs $3 per glass, and cheese costs $6. What is the slope of the budget constraint?
A consumer has income of $3,000. Fresh Juice costs $3 per glass, and cheese costs $6 per pound.
(a) Draw the consumer's budget constraint (put cheese on the horizontal axis). What is the slope of this budget constraint?
(b) The price of cheese rises from $6 to $10 per pound, while the price of Fresh Juice remains $3 per glass. For a consumer with constant income of $3,000, show what happens to consumption of Fresh Juice and cheese (assuming both are normal goods). Decompose the change into income and substitution effects. Be sure to clearly mark all relevant information in your diagram.
Chapter 21 Solutions
Principles of Microeconomics
Ch. 21.1 - Prob. 1QQCh. 21.2 - Prob. 2QQCh. 21.3 - Prob. 3QQCh. 21.4 - Prob. 4QQCh. 21 - Prob. 1CQQCh. 21 - Prob. 2CQQCh. 21 - Prob. 3CQQCh. 21 - Prob. 4CQQCh. 21 - Prob. 5CQQCh. 21 - Prob. 6CQQ
Ch. 21 - Prob. 1QRCh. 21 - Prob. 2QRCh. 21 - Prob. 3QRCh. 21 - Prob. 4QRCh. 21 - Prob. 5QRCh. 21 - Prob. 6QRCh. 21 - Prob. 7QRCh. 21 - Prob. 1PACh. 21 - Prob. 2PACh. 21 - Prob. 3PACh. 21 - Prob. 4PACh. 21 - Prob. 5PACh. 21 - Prob. 6PACh. 21 - Prob. 7PACh. 21 - Prob. 8PACh. 21 - Prob. 9PACh. 21 - Prob. 10PACh. 21 - Prob. 11PACh. 21 - Prob. 12PACh. 21 - Prob. 13PA
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- What is a budget constraint? A consumer has an income of $3000. Soda costs $3 per liter and cheese costs $6 per pound. Draw the consumer's budget constriaint with soda on the vertical axis. What is the slope of the budget constraint?arrow_forwardThe graph shows the budget line for a consumer who only buys cookies and magazines. If the consumer's income is $20, what is the price of a cookie? Cookies (number per week) 24 20 16 8 0 2 4 6 8 10 12 Magazines (number per week)arrow_forwarddraw the budget constraint for a person with income of $ 1000 if the price of pepsi is $5 and the price of pizza is $10 what is the slop of their budget constraintope of their budgetarrow_forward
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