Economics - 0348 - 300 PART 5 T HE C O N S U M E R and her...

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300 P A R T 5 THE C O N S U M E R 4. Restaurant meals and housing (measured by the number of rooms) are the only two goods that Neha can buy. She has income of $1,000, and the price of each room is $100. The relative price of 1 room in terms of restaurant meals is 5. How many restaurant meals can she buy if she spends all her money on them? 5. Answer the following questions based on two assumptions: (1) Inflation increases the prices of all goods by 20%. (2) Ina’s income increases from $50,000 to $55,000. and her marginal utility of the fifteenth cup of hot choco- late is 5. c. Kory is considering buying 1 CD and 10 cups of hot chocolate. At that bundle, her marginal rate of substitu- tion of CDs in place of hot chocolate is 5; that is, she would be just willing to exchange 5 cups of hot chocolate for 1 CD. 7. Raul has 4 Cal Ripken and 2 Nolan Ryan baseball cards. The prices of these baseball cards are $24 for Cal and $12 for Nolan. Raul, however, would be willing to exchange 1 Cal card for 1 Nolan card.
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