‫جامعة النجاح الوطنية‬

‫كلية االقتصاد والعلوم االجتماعية‬

Principle of Microeconomics / ‫قسم االقتصاد‬
Homework (3)

Consumer theory :‫املوضوع‬

Case(1): Suppose the price of X is $5 and the price of Y is $10 and an Income is $500.
A. Sketch (‫ )ارسم‬the household budget constraint.
B. Find the Slope of the budget constraint.
C. Suppose the household income doubles to $1,000. Sketch the new budget constraint.
D. Suppose the Price of X increases to $8. Sketch the new budget constraint. (I =$500).

60 120
40 100
BL BL2
Y

80
20
60
Y

0 40
0 50 100 150
20
X
0
0 100 200 300
A) X
−𝑷𝑿
B) slope BL= = −𝟎. 𝟓
𝑷𝒚
C)

D) Bl will rotate inside

60

50

40

30
Y

20

10 BL2
0
0 20 40 60 80 100 120
X
Case(2): Assume that Salma has $44 to spend on books and movies each month. Movies cost
$8 each, and books cost $10 each. Salma’s preferences for movies and books are summarized
by the following information: (7)

𝑸𝒎 𝑻𝒖𝒎 𝑴𝒖𝒎 𝑴𝒖𝒎 ⁄𝑷𝒎 𝑸𝒃 𝑻𝒖𝒃 𝑴𝒖𝒃 𝑴𝒖𝒃 ⁄𝑷𝒃

0 0 - - 0 0 - -
1 50 50 6.25 1 22 22 2.2
2 80 30 3.75 2 47 25 2.5
3 100 20 2.5 3 57 10 1
4 110 10 1.25 4 60 3 0.3
5 116 6 0.75 5 62 2 0.2
6 121 5 0.625 6 62 0 0
7 123 2 0.25 7 62 0 0

A. complete the table above. (4)

B. Based on the data in the table, how many Movies and Books should Salma purchase,
and what is her total utility from the purchase? Does the utility-maximizing rule hold true
for her purchase? Explain. (3)

She Max. her utility when 3M + 2B

Tu= 147
All the best