Impact the Substitution Effect and the Real Income Effect Economics Assignment Help

Assignment Task

Task
1. The following table shows the total utility a consumer gets from consuming two goods – A and B  Assume that the price of good A is $5 per unit and the price of good B is $10 per unit 

a. For a budget of $55, how many units of each good would the consumer consume?
b. If the budget were to increase by $10, how many units of each good would the consumer consume?
2. Suppose the price of tomatoes falls, ceteris paribus,. Describe the impact the substitution effect and the real income effect would have on the quantity demanded for tomatoes.
3. Assume Syamir is a rational consumer. Nonetheless, Syamir’s entire food budget of $40 per week is used only for burgers and soda. Burger cost $0.69 each, and soda is $o.75 per can. His marginal utility from burgers is 234 utils, and his marginal utility from soda is 175 utils. What would Syamir do to increase his total utility.

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