{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Price Theory HW2

# Price Theory HW2 - Skelton Eco 3301 Homework 2 1 Suppose...

This preview shows pages 1–2. Sign up to view the full content.

Skelton Eco 3301 Homework 2 1. Suppose you divide your income between cheese and other goods. Cheese costs \$4 a pound and you buy 10 pounds a day. One day the price of cheese rises to \$6 a pound and at the same time your income rises by \$20 a day. Do these changes make you better off, worse off, or neither? 2. Based on his preferences, Spike Lee is willing to trade 4 movie tickets for one basketball ticket. If movie tickets cost \$8 and basketball tickets cost \$40, should he make the trade? 3. Suppose Lizzie Borden views butter and margarine as perfectly substitutes for each other. A) Draw a set of indifference curves that illustrate her preferences for butter and margarine. B) Are these indifference curves convex? Why or why not? C) If butter costs \$2 per package and margarine \$1, and if Lizzie has \$20 to spend on butter and margarine, which butter/margarine market basket will she purchase? Show this result graphically (with indifference curves and her budget line).

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern