Chapter 2: Q23 (page 44)
Marie has a weekly budget of \(24, which she
likes to spend on magazines and pies.
If the price of a magazine is \)4 each, what is
the maximum number of magazines she could buy in a
week?
Marie can buy maximum 6 units of magazines with this money income
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Do economists have any particular expertise at making normative arguments? In other words, they have expertise at making positive statements (i.e., what will happen) about some economic policy, for example, but
do they have special expertise to judge whether or not
the policy should be undertaken?
Marie has a weekly budget of \(24, which she likes to spend on magazines and pies. If price of magazine is \)4 each & price of pie is 12 each :
Draw Marie’s budget constraint with pies on the horizontal axis and magazines on the vertical axis. What is the slope of the budget constraint?
Explain why scarcity leads to tradeoffs.
Suppose Alphonso’s town raised the price of bus tickets to \(1 per trip (while the price of burgers stayed at \)2 and his budget remained $10 per week.) Draw Alphonso’s new budget constraint. What happens to the opportunity cost of bus tickets?
It is clear that productive inefficiency is a waste since resources are used in a way that produces less goods and services than a nation is capable of. Why is allocative inefficiency also wasteful?
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