What is the percentage decrease in revenue

Robert treats coffee and creamer as perfect complements and has very specific requirements for the ratio of creamer to coffee. H

diamong [38]

Answer:

a. Robert's optimal consumption bundle contains <u>9.18</u> cups of coffee and <u>45.88</u> packets of creamer.

b. Zero packets of creamer is the substitution effect.

Explanation:

a. Suppose that Robert has $39.00 to spend on coffee and creamer. His optimal consumption bundle contains _______cups of coffee and _________

The consumption ratio can be stated as follows:

5 Creamer = 1 cup of coffee

Budget line has an equation can also be given as follows:

B = (Pm * Qm) + (Pf * Qf) ...................... (1)

Where;

B = Budget = The amount Robert has to spend on coffee and creamer = $39.00

Pm = Price of creamer = $0.25

Qm = Quantity of creamer = ?

Pf = Price of coffee = $3.00

Qf = Quantity of coffee = ?

39 = (0.25 * Qm) + (3 * Qf)

39 = 0.25Qm + 3Qf

Since "5 Creamer = 1 cup of coffee". This also implies thal 1 creamer = 1 / 5 cup of coffee. Therefore, we have;

39 = 0.25Qm + (3 * 1/5 * Qm)

39 = 0.25Qm + (3/5)Qm

39 = 0.25Qm + 0.60Qm

39 = 0.85Qm

Qm = 39 / 0.85

Qm = 45.88

Qf = 45 / 5 = 9.18

Therefore, Robert's optimal consumption bundle contains <u>9.18</u> cups of coffee and <u>45.88</u> packets of creamer.

b. Now, suppose that the price of creamer rises to $0.50 per packet. What is the substitution effect of this price change?

Since Robert treats coffee and creamer as perfect complements, this implies that there there is nothing like substitution effect under this condition.

Therefore, zero packets of creamer is the substitution effect.

6 0

2 years ago

When a donor makes a gift in trust, who is considered the done?

BartSMP [9]

Answer:

yeet

Explanation:

5 0

2 years ago

How to estimate elasticity?

andrezito [222]

The formula for calculating elasticity is: Price Elasticity of Demand=percent change in quantitypercent change in price Price Elasticity of Demand = percent change in quantity percent change in price .

7 0

3 years ago

f the steps are small, a step-variable cost may be approximated using a ______ cost function without significant loss in accurac

posledela

If the steps are small, a step-variable cost may be approximated using a Variable cost function without significant loss in accuracy.

<h3>Variable cost function</h3>

An expense for the company that varies according to how much is produced or sold is called a variable cost.
Depending on a company's production or sales volume, variable costs grow or fall. They climb as production rises and reduce as production declines.
It is a production cost whose level fluctuates in response to shifts in a business's manufacturing activities.
For instance, the raw materials required to make a product's components are regarded as variable costs because they frequently change depending on the volume of units produced.
The total variable cost curve depicts the relationship between total variable cost and the volume of output produced graphically.

To learn more about the Variable cost function refer to:

brainly.com/question/27996021

#SPJ4

7 0

2 years ago

The marginal benefit Colin gets from eating a fourth slice of pizza isA. the total benefit Colin gets from eating four slices of

julia-pushkina [17]

Answer:

A) the total benefit Colin gets from eating four slices of pizza minus the total benefit Colin gets from eating three slices of pizza.

Explanation:

Marginal benefit refers to the utility received from doing something one more time. When businesses want to measure marginal benefits, they simply measure the extra revenue generated by selling one more unit, that is why it is referred to as marginal revenue. But when individuals get a marginal benefit, we tend to use a unit called util, and the marginal benefit is how many utils do we get from consuming an extra unit of product.

8 0

3 years ago