hw6_2007_KEY - Econ 1101HolmesFall 2007 Homework 6 KEY Note...

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1 Econ 1101—Holmes—Fall 2007 Homework 6 Note 1: This is a copy of the homework for practice. The actual homework is a web document that is completed online. It can be found at the WebVista course home page by clicking the assessments icon on the top left-hand corner. The due date for the homework being submitted at the web site is Sunday, December 9, 11:59 pm Central Time. Late homework will not be accepted. Note 2: I recommend you first do the homework on paper and then fill out the online assignment. If you start the homework online and decide you want to finish it later, be sure to click on Save All. When you are finished with the homework, click Finished and your homework will be submitted. If you submit your assignment and decide later you want to change an answer, you will need to redo the entire assignment . In any case where a student submits more than one version of the homework, only the last version submitted will count towards the student’s grade. Note 3: I consider it academic misconduct for one student to fill out the homework at WebVista for another student. This is misconduct by both students: the one typing in the other's homework and the one asking the other to do it. Instructions The assignment below asks you to draw some graphs. You should do this on the paper copy of the homework. We are not collecting the graphs. Full credit will be given for the graphs to anyone submitting the homework. For this homework, the graphs are worth 30 points. The part submitted through WebVista is worth 72 points. This is a total of 102 points, which includes 2 bonus points. (2).
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2 1. HW6_Q1 (Points: 13) Question 1 . Laura has a budget of $32 per month for her cell phone. She uses this budget to pay for calls and text messages. Suppose calls cost $8 per unit (units are 100 minute blocks) and text messages cost $2 per unit (units are 100 message blocks). Her budget constraint is illustrated on below and labeled “B.C. Plan 1.” Some of Laura’s indifference curves are also illustrated in red. They are labeled U1, U2, etc. Indifference curves with higher numbers give higher utility to Laura. At the initial prices, we can see that Laura maximizes utility by consuming 2 calls and 8 text messages, point A in the figure.
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This note was uploaded on 02/24/2011 for the course ECON 1101 taught by Professor Someguy during the Fall '07 term at Minnesota.

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hw6_2007_KEY - Econ 1101HolmesFall 2007 Homework 6 KEY Note...

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