This is my ECON201 Questions:Competitive Behavior

II. PROBLEMS , In Spring 2020 Gary consumed two goods: packs of toilet paper (with quantity denoted by t) and 'dollars spent on everything else' (quantity denoted by e). a (a) Suppose a pack of toilet paper costs $6 and Gary's income is m = $60. Write down . Gary's budget constraint and plot his budget set and budget line (put 1; on the horizontal axis, as good 1). Label the axes, intercepts and everything else carefully. Find the slope of the budget line. .. The following applies for parts (b)-(d). Now suppose that there are only two stores Gary could go to i Costco and Save on Foods. Save on Foods allows each customer to purchase maximum 2 packs of toilet paper, at $6 each. Costco sells packs of toilet paper for $5 each but only if a customer spends at least $30 on everything else (no toiled paper can be bought otherwise). Gary's income is still $60. . (b) Plot Gary's budget line if he goes to Costco. On the same graph, plot his budget line if he goes to Save on Foods instead. . (0) Can Gary buy the bundle (5; 30) (5 toilet paper packs and $30 spent on everything else) from Save on Foods? How about from Costco? Explain why or why not. a (d) Are there valid preferences for Gary (plot an example indifference curve) so that he would rather go to Save on Foods instead of Costco? Explain why or why not. a Problem 2 (40 pts) Explain your answers! 4 Andy consumes only coffee and sandwiches and has a utility function gin; x2) = 3 h1(x1}+6 h1(x2} where x1 is the quantity of coffee and x2 is the number of sandwiches consumed. ln(x}denotes the natural logarithm of x. Suppose a coffee costs $2 and a sandwich costs $p. Andy's income is $m. (a) Write down Andy's consumer's problem of choosing his optimal consumption bundle. a (b) Find Andy's demand function for sandwiches. How does it depend on p and m (increasing, decreasing, constant)? Are sandwiches an ordinary good for Andy? Explain why or why not. a (c) Find the equation of Andy's Engel curve for sandwiches (i.e., express m in terms of 2m)\"; Are sandwiches a normal good for Andy?\" (d) How many coffees and sandwiches would Andy consume if his income is m = $120I and a sandwich costs p = $5? Starting from that, how would Andy's optimal consumption bundle change if a $1 quantity tax is imposed on coffee and Andy is given $15 lump-sum subsidy to his income? Is he better off or worse off after the tax and subsidy compared to before? u (e) Jenny also consumes only coffee (at price $2) and sandwiches (at price $p) but has the utility function 2x1 + 25 ln(x2). If her income is $55 and p = $5 find her optimal consumptiona bundle. What quantities of coffee and sandwiches would Jenny consume if her income was $10 instead?u