Suppose that a consumer with income of birr 90 wants to spend the whole income on good B and good A. Assume that the goods are consumed on a one-to-one basis and one good is worthless without the other. The price of good A and B are both 3 birr. A. How many units of good A&B will the consumer buy? B. If the price of good A increases to birr 6, how many he/she buy of each? C.vWhat type of preferences does consumption of the two goods represent? What is the shape of the indifference curve for this type of preference?

/in /by

Suppose that a consumer with income of birr 90 wants to spend the whole income on good B and good A. Assume that the goods are consumed on a one-to-one basis and one good is worthless without the other. The price of good A and B are both 3 birr.
A. How many units of good A&B will the consumer buy?
B. If the price of good A increases to birr 6, how many he/she buy of each?
C.vWhat type of preferences does consumption of the two goods represent? What is the shape of the indifference curve for this type of preference?

You might also like
Explain the term price elasticity of demand? How is it measured? What factors influence market demand for products? If the price elasticity is -3 and RM 100 is the marginal cost of product X, what should be the optimal sale price?
Illustrate consumer and producer surpluses with demand and supply diagrams and explain how to maximize the total surplus (consumer surplus + producer surplus) at the equilibrium level.
The tragedy of the commons is a particular prevalent form of externality. Show how it demonstrates the tendency for common property to be overused
To examine the relationship between profits and dividends, a researcher decides to use a simple linear regression model: DIVIDENDST= Β1 + Β2PROFITS + UT The data required for this question are the dividends and profits time series given in data set _D303_TS3.DTA_. a) Examine your data to determine whether (i) the dividend and profit series are trend stationary or difference stationary (ii) are dividends and profits co-integrated? b) Employ the error correction mechanism to study the long and short run behaviourof dividends and profits.
Explain the meaning of the following concepts in terms of the production possibility frontier. 1.2.1 Attainable points of production 1.2.2 Unattainable points of production 1.2.3 Inefficiency
Emily has decided to spend one-third of her income on clothing. What is Emily’s demand curve for clothing? □ Emily’s taste – as reported in the previous question - has now changed. She now realizes the importance of savings and spends only one-tenth of her income on clothing, instead of one-third. How will Emily’s demand curve change?
IBM's debt ratio for 2010 is 79.6%. This means that IBM has ______. * 79.6% cents of assets available for each R1 of its liabilities * 79.6% of non-current assets available for each R1ofnon- current liabilities * financed 79.6% of its debt with assets * financed 79.6%of its assets with debt
Johnson company experts that it will need $600000 cash for July, 2016. Possible means of financing are: (a) Establish a 1- year credit line for $600000. The bank requires a 2 percent commitment fee. The interest rate is 21 percent. Funds are needed for 30 days. (b) Fail to take a 2/10, net/40 discount on a $600000 credit purchase. (c) lssue $600000, 20percwnt commercial paper fir 30 days. Which financing strategy should be selected?