Patrick consumes only two goods: Celtic Music concerts and Celtic Springs Water. Patrick earns $100 per month at his part-time job in the library. The price of Celtic concerts is $10. The price of Celtic Springs Water is $2. Patrick currently goes to 5 Celtic concerts and consumes 25 bottles of Celtic Spring Water in a month.(a) Draw Patrick's budget constraint and optimal consumption bundle such that Celtic concerts are measured on the horizontal axis.(b) In April, Patrick receives a 5 percent pay increase. Inflation raises the price of concerts to $10.50 and the price of Celtic Springs Water to $2.10. Draw Patrick's new budget constraint and optimal consumption bundle, considering that the number of Celtic concerts is measured along the horizontal axis. How many Celtic concerts does he
attend in April? How many bottles of water does he drink in April?
What will be an ideal response?
(a)
(b) His budget constraint does not change. The new vertical intercept of 50 bottles of water is the same as the old vertical intercept of 50 bottles of water. The new horizontal intercept of 10 concerts is the same as the old horizontal intercept of 10 concerts. The relative price of Celtic concerts is always 5 bottles of Celtic Springs Water. He consumes 5 Celtic concerts and 25 bottles of Celtic Spring Water in April.
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A. recessionary; A B. recessionary; C C. recessionary; B D. expansionary; A
According to the principle of diminishing returns, if the number of workers is increased beyond the point of diminishing returns, then the additional worker
A) increases total output by more than the amount of previous workers. B) increases total output by the same amount as previous workers. C) decreases total output. D) increases total output by less than the amount of previous workers.
What is economics and what does it try to explain?
What will be an ideal response?
As the wage rate increases, the quantity of labor supplied by an individual worker will:
a. invariably increase b. invariably decrease. c. first increase and then decrease. d. first decrease and then increase. e. remain constant.