Sunday
April 20, 2014

Homework Help: economics

Posted by Jake on Tuesday, October 2, 2012 at 1:20am.

When the price of X is $1 and the price of Y is $1 and income is I, Joe Panther spends $100 on good X. One day Joe is walking down Downer street and is dismayed to discover that the price of good X has increased to $2. However, moments later Joe is delighted to find a $100 bill on the street. Use budget lines and indifference curves to answer the following question, leaving his unknown income as the variable I. Assume that he has normal convex shaped indifference curves and that he spends all of his income.

A)How many units of goods X and Y does Joe purchase before the price increase and finding the $100? Part of your answer will be in terms of prices and income.
B)After the price increase and finding the money can Joe still afford the same number of units of X and Y as in part A?
C)Is Joe better off, worse off, or just the same as before the price increase and finding the money? In other words, is utility higher in part A) or when Px=2 and income is I+100?

Answer this Question

First Name:
School Subject:
Answer:

Related Questions

Economics - 3. Suppose a firm has a constant marginal cost of $10. The current ...
economics - Black markets result from: A. price floors B. price ceilings C. ...
managerial economics - Price 1 is 50, price 2 is 38.78. Quantity 1 is 100, ...
economics - ) The demand curve for haircuts at Terry barnyards Hair Design is P=...
economics - When the market price is above equilibrium price, the market price ...
economics - Speculate as to why price leadership is legal in the U.S. whereas ...
Economics - What are the principles of economics invloved in producing price ...
economics - in economics a price is made up of what two things?
economics - In the simple economics of a competitive market price increases ...
ECONOMICS - When does price remain below the equilibrium ? When does price ...

Search
Members