Microeconomics

Suppose a taco costs $4 and a burrito costs $2. Moreover, this Mexican

Suppose a taco costs $4 and a burrito costs $2. Moreover, this Mexican restaurant has a special deal. After you’ve bought 6 burritos, you can buy each extra burrito for $1.50. Assume that tacos are on the vertical axis and burritos on the horizontal axis. What is the marginal rate of transformation (MRT) when 8 […]

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Date: September 9th, 2020

Individuals derive utility from picnics, p, and kayak trips, k. Assumi

Individuals derive utility from picnics, p, and kayak trips, k. Assuming that an individual’s utility is U(p,k) = k0.5p0.5 and income is $100, what is the marginal rate of substitution (MRS) between picnics and kayak trips? A) MRS = 1. B) MRS = -1. C) MRS = -1/2 D) There is no substitution because picnics […]

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Date: September 9th, 2020

If the consumer’s income increases while the prices of both goods rema

If the consumer’s income increases while the prices of both goods remain unchanged, what will happen to the budget line? A) The budget line rotates inward from the intercept on the horizontal axis. B) The budget line rotates outward from the intercept on the vertical axis. C) The budget line shifts inward without a change […]

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Date: September 9th, 2020

Clifford lives by the motto “Eat drink and be merry today, for tomorro

Clifford lives by the motto “Eat drink and be merry today, for tomorrow doesn’t matter.” If today’s consumption is represented by “x” and tomorrow’s consumption is represented by “y”, then which of the following best represents Clifford’s utility function? A) U = x – y B) U = x/y C) U = x D) U […]

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Date: September 9th, 2020