# Quiz 5 - 300 and the bundle chosen is(X = 150 Y = 300 When...

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

Econ 302 Quiz 5 McLeod Name ______________________ ID# ___________________________ 1. (10 points) Suppose a consumer’s preferences are given by U(X,Y) = X*Y. Thus, the marginal utility of X, MUx = Y and the marginal utility of Y, MUy = X. Suppose the consumer has \$600 to spend and the price of good Y is \$1. On the back of this page, sketch the price-consumption curve for the prices of Px = \$1, Px = \$2 and Px = \$5. To do this, carefully draw the budget constraints associated with each of the prices for good X, and indicate the bundle that the consumer chooses in each case. Also, be sure to label your graph accurately. All of the budget constraints should have a vertical intercept (Y-axis) of 600. When Px = \$1, the horizontal intercept of the budget constraint (X-axis) should be 600, and the bundle chosen is (X = 300, Y = 300). When Px = \$2, the horizontal intercept of the budget constraint (X-axis) should be

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.

Unformatted text preview: 300, and the bundle chosen is (X = 150, Y = 300). When Px = \$5, the horizontal intercept of the budget constraint (X-axis) should be 120, and the bundle chosen is (X = 60, Y = 300). The PCC is the horizontal line that joins these bundles. 2. (6 points) Refer to the diagram below. Assuming the consumer has \$10 to spend, identify three price/quantity combinations which are on the consumer’s demand curve for Snacks. Price of Snacks Quantity of Snacks \$.25 10 \$.5 7 \$1 5 3. (4 points) What is being measured on the vertical and horizontal axes when graphing a) an Engel Curve? Income on the vertical axis, and quantity of good X on the horizontal axis. b) a price-consumption curve Quantity of good Y on the vertical axis and the quantity of good X on the horizontal axis....
View Full 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