Econ 302 Homework 4

# Econ 302 Homework 4 - Ali Toossi Homework 4 Chapter 3...

This preview shows pages 1–3. Sign up to view the full content.

Ali Toossi Homework 4 Chapter 3: Questions for review Seventh edition page 77: 1, 2. 1. If the prices of all products are rising at 20% per year and your employer gives you a 20% salary increase you are equally well off because both changed. 2. The statement is false. The slope of the budget constraint gives you an idea of the opportunity cost, but not exact prices of two goods. Chapter 3: Problems Seventh edition page 77-79: 3, 4, 8, 11, 12, 18, 19 . Almonds Cashews Walnuts Almonds Pecans Macadamia nuts Almonds Macadamia nuts 3. A) He prefers pecans to walnuts. B) We can’t tell which one he prefers. 4. The original slope = -(M/Px)/(M/Py) = -120/80 = -1.5 The slope of the change = -(M/(Px+18)) / -(M/(Py+12)) = - 138/92 = - 1.5 There is no change in slope but Px and Py increased. So, it’s true that the new budget line will be shifted inward and parallel to the old budget line.

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

View Full Document
19. a) Opportunity cost for the first 10 minutes = 0 Opportunity cost for the last 10 minutes = (0.25* 10) = 2.5
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 3

Econ 302 Homework 4 - Ali Toossi Homework 4 Chapter 3...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online