Econ 302 Homework 4

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

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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.
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19. a) Opportunity cost for the first 10 minutes = 0 Opportunity cost for the last 10 minutes = (0.25* 10) = 2.5
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Econ 302 Homework 4 - Ali Toossi Homework 4 Chapter 3:...

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