Your local telephone company has offered you a choice between the following billing plans: Plan A: Pay $0.05 per call. Plan B: Pay an initial $2/wk, which allows you up to 30 calls per week at no charge. Any calls over 30/wk cost $0.05 per call. If your income is $12/wk and the composite good costs $1, graph your budget constraints for the composite good and calls under the two plans.
Answer to relevant QuestionsAt your school’s fund- raising picnic, you pay for soft drinks with tickets purchased in advance—one ticket per bottle of soft drink. Tickets are available in sets of three types: Small: $3 for 3 tickets Medium: $4 for 5 ...Tom spends all his $100 weekly income on two goods, X and Y. His utility function is given by U(X, Y) = XY. If PX = 4 and PY = 10, how much of each good should he buy?How can changes in the distribution of income across consumers affect the market demand for a product?a. For the demand curve P = 60 - 0.5Q, find the elasticity at P = 10.b. If the demand curve shifts parallel to the right, what happens to the elasticity at P = 10?In 2001, X cost $3 and sold 400 units. That same year, a related good Y cost $10 and sold 200 units. In 2002, X still cost $3 but sold only 300 units, while Y rose in price to $12 and sold only 150 units. Other things the ...
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