Problems-ch5-8

# Problems-ch5-8 - Exercise 1 The graph shows 's Peters...

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Exercise 1 The graph shows 's Peter’s consumption possibilities. Draw a new curve showing Peter's consumption possibilities when the price of garlic bread falls.

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Exercise 2 The graph shows Mary's consumption possibilities. Draw a new curve showing Mary's consumption possibilities when her income increases.
Exercise 3 The graph shows Bob's consumption possibilities, given his current income and the prices of hamburgers and hot dogs. Which of the labeled points is unaffordable for Bob?

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Exercise 4 Sarah has \$27 a week to spend on cookies and donuts. The price of a cookie is \$1.50 and the price of a donut is \$1.50 . Can she afford to buy 15 cookies and 9 donuts?
Exercise 5 Nick has \$36 a week to spend on coffee and soda. The price of a cup of coffee is \$2 and the price of a can of soda is \$1. What is the relative price of a can of soda?

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If marginal utility per dollar spent is not equal, then Jill will maximize her utility if she buys more of the good with the higher marginal utility per dollar spent and less of the good with the lower marginal utility per dollar spent. True or false?
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## Problems-ch5-8 - Exercise 1 The graph shows 's Peters...

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