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##### AAMicroeconomics: An Intuitive Approach (with and without Calculus) Chapter Z

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Question;5. Derive;the budget line equation for the case where good 1 is a composite good. What is;the vertical intercept and what is the slope?;6. A;consumer has \$1,000 a week to spend on renting square feet of housing (at a;price of \$5 per square foot) and eating out (at a price of \$20 per meal). With;square feet of housing on the horizontal and meals on the vertical axis, what;is the vertical intercept and what is the slope of this consumer?s budget;constraint?;7. A;consumer has \$1,000 a week to spend on renting square feet of housingx1 (at a price of \$5 per square foot) and eating out mealsx2(at a price of \$20 per meal).;Derive the budget line equation and find the opportunity cost of housing in;terms of meals in your equation.;PROBLEM;1. Suppose;the government levies a per-unit tax on TVs, and this tax increases the price;of TVs by \$10.;a. On a graph with TVs on the;horizontal axis and ?\$?s of other consumption? on the vertical, illustrate how;the budget constraint for a consumer with exogenous income changes as a result;of the tax.;b. Suppose you know the bundle;on the after-tax budget that is chosen by the consumer. Illustrate on your;graph how much in tax revenue the government is raising from this consumer.;c. If the government replaced;the tax on TVs with a lump sum tax that does not alter any prices but raises;the same amount of revenue from the consumer, how would this consumer?s budget;constraint change?

Paper#55021 | Written in 18-Jul-2015

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