--%>
Assignment Help - homework help

Problem on utility-maximizing bundle

Jane consumes only apples and chocolate.  She is always willing to trade 1piece of chocolate for exactly 3 apples. Her income is $200.  She can buy apples for $1 each and chocolate for $2 per piece.

a. To Jane, apples and chocolate are (circle 1):

  • Perfect complements
  • Perfect substitutes
  • Neither perfect complements nor perfect substitutes
  • Not enough information to tell

b. On the graph below, draw Jane’s budget constraint and several of her indifference curves. Illustrate her utility-maximizing bundle.

c. Jane’s local apple orchard has had a huge harvest. To try to sell more apples, they offer Jane a quantity discount. She still pays $1 per apple for the first 100 apples, but she can buy any additional apples beyond that for only $0.40 each.

Illustrate Jane’s new budget constraint and her new utility-maximizing bundle.

   Related Questions in Microeconomics

  • Q : Explanation of Substitution Effect The

    The substitution effect helps most in describing why: (1) Demand curves slope down. (2) Goods are either complements or substitutes. (3) Air travel costs less than by walking the cross country. (4) Uncertainty regarding quality justifies govt. control

    		•
  • Q : Example of drop in demand Decreased

    Decreased airline bookings subsequent to some major airline crashes would point out a: (i) Reduction in the amount of airline travel demanded. (ii) Drop in the demand for air travel. (iii) Phobia among air travelers which is irrational. (iv) Horizontal demand curve fo

    		•
  • Q : Asymmetric Information problem The

    The one-year old car tends to sell for much less than the brand latest car. A part of the reason is that: (i) Sellers and buyers have similar information regarding used cars as they do latest cars. (ii) Buyers and sellers both encompass more information regarding new

    		•
  • Q : Declining cost structure by natural

    Natural barriers to entry within a market arise primarily by: (w) strategies by existing firms to discourage the entry of new firms. (x) perfectly inelastic demands for products. (y) the declining cost structure inherent in producing certain goods. (z

    		•
  • Q : Problem relating to Exploitation I have

    I have a problem in economics on Problem concerning Exploitation. Please help me in the given question. Whenever resource suppliers are salaried less than the values of their marginal products [or VMPs], then they are stated to be: (p) Monopsonistic. (q) Monopolistic.

    		•
  • Q : Product differentiation in conduct

    Several market structures may pivot around goods which are heterogeneous, however the only market structure that absolutely needs goods to be differentiated within the minds of consumers of: (1) perfect competition. (2) pure competition. (3) monopolistic competition.

    		•
  • Q : Economic efficiency of purely

    Most economists favor purely competitive markets since they tend to as: (1) economies of scale. (2) large profits. (3) mutual interdependence. (4) corporate organizations. (5) economic efficiency. Hello guys I want

    		•
  • Q : Problem on Efficiency Wage I have a

    I have a problem in economics on Efficiency Wages problem. Please help me in the following question. The Efficiency wages: (i) do not maximize firm profit. (ii) Cause involuntary unemployment. (iii) Are paid due to adverse selection. (iv) Are never se

    		•
  • Q : Price elasticity of demand-price falls

    The quantity dinner salads demanded is 100 everyday while Café Les Gourmands charges a price of $1.80, although when price drops by $1, quantity demanded is one hundred fifty. The price elasticity of demand for dinner salads at such restaurant

    		•
  • Q : Changing in strategy and behaviour

    Within the kinked demand curve model, when one firm: (1) advertises better quality, its rivals will do nothing. (2) raises its price, its rivals will also increase prices. (3) increases its output level, when its rivals will do nothing. (4) lowers its

    		•