--%>
Assignment Help - homework help

Question on budget line

On a Lotto Canada ticket A person won $15 at the local 7-Eleven & decided to spend all the winnings money on bags of peanuts and candy bars. The cost of candy bars= $.75 and the cost of peanuts = $1.50.

a. In general, how would he decide which of the obtainable combinations of candy bars and bags of peanuts to buy?

b. Assume that he had won $30 on your ticket, not $15. Illustrate the $30 budget line in your diagram. Why would this budget line is preferable to the old one?

 

 

E

Expert

Verified

(a) The decision of how much of each to purchase would involve weighing the marginal benefits & marginal costs of the several alternatives.  If, for instance, the marginal benefits of moving from alternative C to alternative D are greater than the marginal costs, then this consumer have to move to D (and then compare again to E, and so forth, until MB=MC is obtained).

(b)

1360_budget line.png

The budget line at $30 would be preferable since it would let greater consumption of both goods.

 

 

   Related Questions in Finance Basics

  • Q : Four-Tranche Sequential-Pay Structure

    1. How would you fund the tranche Z of the example in the securitization manual? 2. What reinvestment rate from the excess spread will guarantee that there will be sufficient money to pay0ff creditors of tranche Z? 3. When tranche Z creditors will get

    		•
  • Q : Difference in annuities due or ordinary

    Normal 0 false false

    		•
  • Q : Describe the fact of common

    Normal 0 false false

  • Q : Describe the importance of additional

    Normal 0 false false

  • Q : How do mergers influence consumers How

    How do mergers influence consumers?The effects mergers have on consumers differ widely. There may be some inconvenience and anxiety while a customer's bank or branch is obtained. The issuance of new account numbers and new checks is a familiar h

    		•
  • Q : Describe Schedule 10 Schedule 10 :

    Schedule 10: (Supplementary Schedule of Appropriations): The Department of Finance control document listing all the appropriations and allocations of funds accessible for expenditure throughout the past, present, and budget years. Such documents are s

    		•
  • Q : Define Referendum Referendum: This is

    Referendum: This is the power of the electors to support or reject statutes or parts of statutes, with particular exceptions and meeting particular deadlines and number of voter’s signatures.

    		•
  • Q : What is Cash Flow Statement What is

    What is Cash Flow Statement: It is a statement of cash receipts and disbursements for a particular time period.

    		•
  • Q : Assignments i want to write final state

    i want to write final state report. My state is Texas. You can use the resources that i attached, also you can use another resources to cover the outlines.

    		•
  • Q : Define Current Year Current Year (CY):

    Current Year (CY): It is a term utilized in budgeting and accounting to designate the operations of the current fiscal year in contrast to past or future periods.

    		•