Suppose that George is interested in only two goods, cigars and scotch. Employ the indifference curve/ budget line apparatus to show a case where a decrease in the price of cigars leads to an increase in George’s scotch consumption. Does this imply that cigars and scotch are complements to George? Explain your answer.
Answer to relevant QuestionsRepeat the preceding question but assume that a decrease in the price of cigars leads to a decrease in George’s scotch consumption. Does this imply that scotch is an inferior good in George’s case?At the “all you can eat” brunch buffet offered by Chez Paul’s Cajun Restaurant, consumers pay a price of $ 15 and then can consume all they want. Show a consumer’s optimal consumption point with a budget line and ...What would an indifference map (with expected return on the vertical axis and risk on the horizontal axis) look like for a risk neutral investor? For a risk-loving investor? “Private markets ration goods among consumers in an efficient way.” Explain what this statement means. Does it imply that there is no basis for thinking that some other distribution would be better? Show how a total product curve for an input can be derived from an isoquant map. Why does the question specify “a total product curve rather than “the” total product curve?
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