Chat with us, powered by LiveChat 1. (a) Suppose a doughnut costs 66 and a biscuit costs 4 and Joan has 624 to spend. Draw Joan's budget constraint with biscuits on the vertical(Y) axis. Suppose that Joan's preferences are such that she is always indifferent between an extra 2 biscuits and an extra 1 doughnut. (b) (i) What is Joan's Marginal Rate of substitution? Explain (ii) Draw Joan's indifference map and find the bundle that will maximize Joan's utility. Illustrate this on a diagram. (c) Suppose the price of doughnuts rises to 9. Would Joan change her optimal bundle? Illustrate this on a diagram. | Writedemy

1. (a) Suppose a doughnut costs 66 and a biscuit costs 4 and Joan has 624 to spend. Draw Joan’s budget constraint with biscuits on the vertical(Y) axis. Suppose that Joan’s preferences are such that she is always indifferent between an extra 2 biscuits and an extra 1 doughnut. (b) (i) What is Joan’s Marginal Rate of substitution? Explain (ii) Draw Joan’s indifference map and find the bundle that will maximize Joan’s utility. Illustrate this on a diagram. (c) Suppose the price of doughnuts rises to 9. Would Joan change her optimal bundle? Illustrate this on a diagram.

30 Apr 1. (a) Suppose a doughnut costs 66 and a biscuit costs 4 and Joan has 624 to spend. Draw Joan’s budget constraint with biscuits on the vertical(Y) axis. Suppose that Joan’s preferences are such that she is always indifferent between an extra 2 biscuits and an extra 1 doughnut. (b) (i) What is Joan’s Marginal Rate of substitution? Explain (ii) Draw Joan’s indifference map and find the bundle that will maximize Joan’s utility. Illustrate this on a diagram. (c) Suppose the price of doughnuts rises to 9. Would Joan change her optimal bundle? Illustrate this on a diagram.

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9. Shifts in supply or demand II The following graph shows the market for hot dogs in Philadelphia, where there are over 1,000 hot dog stands at any given moment. Suppose the number of hot dog stands increases significantly. Show the effect of this change on the market for hot dogs by shifting one or both of the curves on the following graph, holding all else constant. Demand Supply QUANTITY (Hot dogs) Grade It Now Continue without saving

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