Suppose that Tom's preferences are convex and that Tom's income is $100, the price of food, good X, is $1 per unit and the price of other goods, good Y, is $1 per unit.
Under these circumstances, Tom optimally purchases 50 units of food. Then Tom optimally spends:

Question

Suppose  that Tom's preferences are convex and that Tom's income is $100, the price of food, good X, is $1 per unit and the price of other goods, good Y, is $1 per unit.
Under these circumstances, Tom optimally purchases 50 units of food. Then Tom optimally spends:

BlackTom AI · Accepted Answer

We start by restating the given scenario: Tom has income 100, the price of food X is 1 per unit, and the price of other goods Y is 1 per unit. The information that Tom optimally purchases 50 units of food X tells us he spends 50 on X (since 50 units × $1 per unit = $50).

With a total income of $100, the remaining budget for Y must be 100 − 50 = $50. Since the price of Y is $1 per unit, the quantity of Y purchased would be 50 units if he spends the entire leftover amount on Y.

Given the problem states X=50 units is optimal, the implied allocation is X = 50, Y = 50, spending $50 on Y. This aligns with the budget constraint X + Y ≤ 100 and the prices pX = pY = 1, as well as the assumption of convex preferences that typically yield interior solutions where the consumer reallocates spending smoothly.

If any other options were provided, they would need to be evaluated against these budget and pricing facts: spending on X is 50, so the remaining income for Y is 50, and the price ratio being 1:1 means the remaining expenditure translates directly to 50 units of Y. Therefore, the amount spent on the other goods is $50.

SIPAIA6400_001-002_2025_3 - Microeconomic Analysis for International and Public Affairs Problem Set 4, Individual Portion

Suppose that Tom's preferences are convex and that Tom's income is $100, the price of food, good X, is $1 per unit and the price of other goods, good Y, is $1 per unit. Under these circumstances, Tom optimally purchases 50 units of food. Then Tom optimally spends:

View Explanation

Log in for full answers

Similar Questions

This question has been regraded. Suppose that basket B (x = 5, y = 10) is on Matt's linear budget line, Matt's MRSX,Y (B) = 1/4, PX =$2 and PY = $2. Matt's preferences are represented by smooth curves.

Which of the following is an assumption of the decision-making process followed by consumers to maximize utility?

[Continuation of question 14] Given that the original optimal basket (x = 50, y = 50) is just affordable on the new budget line, will the original optimal basket remain the optimal basket at the new income and prices?

Suppose that basket B (x = 5, y = 10) is on Matt's linear budget line, Matt's MRSX,Y (B) = 1/4, PX =$2 and PY = $2. Matt's preferences are represented by smooth curves.

According to the economic assumptions about consumer choice, could Mary have optimally chosen to purchase one mask and 48 units of other goods per day?

Which of the following statements is TRUE?

A consumer's choices are directly influenced by all of the following except Blank ______. BlackTom题目解析

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler