BUS 207 Lecture Notes - Budget Constraint, Composite Good
6 Dec 2018
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Jennifer spends all her income on two goods, x and y. Py = , and at her utility-maximizing equilibrium she bought 20x and 30y. Year 2, the price of x decreases to and the price of y increases to . Assuming that jennifer"s tastes and income do not change, use budget constraints and indifference curves to figure out whether she is better off or worse off than she was in year 1. Use budget constraints and indifference curves to answer the following: Suppose that the average household consumes 500 gallons of gasoline per year. A 10-cent per gallon tax is introduced coupled with a annual tax rebate per household. Your local cell phone company offers you a choice of billing plans: Plan b: pay an initial . 00 a week, which allows you up to 30 calls per week at no charge. Any additional call over 30 costs 5 cents per call.
