Maria’s preferences over weekly baskets of glasses of Wine (W) and slices of Che
ID: 1137081 • Letter: M
Question
Maria’s preferences over weekly baskets of glasses of Wine (W) and slices of Cheese (C) are partially represented in the graph below. Each week she budgets $45.00 to spend on these goods. The current price of Wine is $7.50/Glass and the price of Cheese is $2.50/Slice.
6. Maria maximizes her satisfaction consuming _______ slices of cheese each week.
a) 2 b) 6 c) 8 d) 10 e) 12
7. Suppose the price of wine falls from $7.50 per glass to $1.25 per glass. The change in Maria’s quantity demanded of wine due to the substitution effect equals ______ glasses of wine.
a) -2 b) 2 c) 4 d) 6 e) 8
8. Suppose the price of wine falls from $7.50 per glass to $1.25 per glass. The change in Maria’s quantity demanded of wine due to the income effect equals ______ glasses of wine.
a) -2 b) 0 c) 2 d) 4 e) 6
9. In this range of prices and income we can determine that Maria considers Wine and Cheese to be _____________ goods , and she considers Wine to be a(n) _______________ good. Explain.
a) substitute; normal d) complementary; normal
b) substitute; inferior e) None of the above are correct.
c) complementary; inferior
20 -T- 10 10 20 30Explanation / Answer
B)6
When she'll have 6 slices of cheese then she would have 4 glasses of wine which would cost her 15 and 30 respectively. Equating her income.
E) 6
7.5/1.25=6
D) complementary; normal
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