Marvelous marvin spends his money on muffins m and a, Ask an Expert

Economics

Marvelous Marvin spends his money on muffins (m) and a composite good (c) (whose price you may assume is $1 throughout this problem). Marvin's utility is U = m + c and his income (I) is 20.

1. Suppose the price of muffins (pm) is 2. Draw Marvin's budget constraint and the highest indifference curve he can reach.

2. What is Marvin's optimal bundle?

3. Suppose that Marvin has the option of joining a muffin club for a membership fee of $10. Club members can purchase muffins for $0.40 each. Draw Marvin's budget constraint if he joins the club. Draw the highest indifference curve he can reach.

4. What is Marvin's optimal bundle (when he is a member of the club)?

5. Will Marvin choose to join the club? Why?

View complete question

Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M9525475

Have any Question?Write your Review or question?

Related Questions in Microeconomics

Question assume that a competitive economy can be described

Question: Assume that a competitive economy can be described by a constant returns to scale (Cobb-Douglas) production function and all factors of production are fully employed. Holding other factors constant, including t ...

A market is supplied competitively by 50 low- cost firms

A market is supplied competitively by 50 low- cost firms, each with cost curve C(q) = 350 + 2q+ q^2, and n high-cost firms, each with cost curve C(q) = 400 + 2q +q^2. Market demand is Q = 2500 - 10*p. If none of the high ...

Question the dollar declined sharply in 1973-4 and 1977-8

Question: The dollar declined sharply in 1973-4 and 1977-8, and those declines were accompanied by sharply higher inflation. However, when the dollar declined even more sharply in 1986-8, the rate of inflation did not ri ...

Question the material in this chapter did not focus on

Question: The material in this chapter did not focus on different methods of predicting inflation because the core rate has changed very little since 1982. The biggest change has been 1.1%, and the average change has bee ...

Question the principal economic argument for abolishing the

Question: The principal economic argument for abolishing the long-term capital gains tax is that it would boost productivity, and hence pay for itself. The principal economic argument against that move is that it would e ...

Question as explained in the chapter economic efficiency is

Question: As explained in the chapter, economic efficiency is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production. Using this explanation of e ...

Question 1 discuss the significance and the impact that the

Question: 1) Discuss the significance and the impact that the environment has on human health. Provide examples and discuss how they relate to the practice of public health today. Your response should be at least 210 wor ...

Question a newspaper headline reads state officials take on

Question: A newspaper headline reads: "State Officials Take on Pricing Regulations to Try to Provide Better, Dependable Income to Dairy Farmers." Is providing dependable income to dairy farmers a good policy goal for gov ...

Quesiton where does the inspiration for new technology

Quesiton: Where does the inspiration for new technology (knowledge, not material items) come from? How is it moved from thought to fruition? Your APA paper should be typed, double-spaced on standard-sized paper. You shou ...

Question 1 what determines market demand for gasoline why2

Question: 1. What determines market demand for gasoline? Why? 2. How does market supply come about? What factors influence If no, why not? 3. How do shifts in demand and supply interact? Translate the results in affectin ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Microeconomics Expert