Trusted by Students Everywhere
Why Choose Us?
0% AI Guarantee

Human-written only.

24/7 Support

Anytime, anywhere.

Plagiarism Free

100% Original.

Expert Tutors

Masters & PhDs.

100% Confidential

Your privacy matters.

On-Time Delivery

Never miss a deadline.

Suppose that Ms Lingle spends her monthly budget of $600 on beers (B) and donuts (D)

Economics Oct 28, 2020

Suppose that Ms Lingle spends her monthly budget of $600 on beers (B) and donuts (D). Her budget constraint is depicted below. Lingle's monthly budget constraint 40-A Number of beers per month 30 Number of donuts per month a) (3 points) Calculate the price of a beer (Pa) and a donut (P.). b) (2 points) Write down the equation defining Ms. Lingle's budget constraint. c) (2 points) Which of the five points marked on the graph would Ms. Lingle not be able to afford? d) (3 points) Suppose that Ms. Lingle maximizes her utility by purchasing bundle B. Calculate the slope of the indifference curve passing through point B. e) (4 points) If, by purchasing bundle B, the marginal utility of the last unit of donuts she purchases is 40, what will be the marginal utility of the last unit of beer she purchases?

Expert Solution

a) PD = 600/30 = 20

PB = 600/40= 15

b) equation : 20D + 15B = 600

c) point D is not affordable, bcoz it lies outside Budget Constraint

d) at eqm, slope of IC= slope of Budget Constraint

= PD/PB

= 20/15

4/3

e) at eqm, MUD/MUB = PD/PB

40/MUB = 4/3

MUB = 40*3/4 = 30

Archived Solution
Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In
Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution
Get Custom Quote
Secure Payment