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Author Question: Consumers allocate their budgets among bundles because A) more is not always better. B) bundles ... (Read 156 times)

krzymel

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on: Jul 1, 2018
Consumers allocate their budgets among bundles because
 
  A) more is not always better.
  B) bundles are the most efficient way to package goods and services.
  C) consumers face choices and tradeoffs.
  D) they want to minimize trips to the store.

Question 2

JC's music production company provides artists with studio time and a backing band to record with. In providing the rhythm track, JC can employ drum machines or drummers.
 
  Regardless of the quantity of output JC produces, he can substitute two drummers with one drum machinedrum machines tire out less quickly). Draw a few isoquant lines (with numbers) reflecting this production function for the rhythm track. Determine the function representing this production process.


Gabe

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Reply #1 on: Jul 1, 2018
Answer to Question 1

C

Answer to Question 2

The drummers and drum machines are perfect substitutes. In other words, the slope of these isoquants has a constant slope meaning at any point on an isoquant the slope is 1/2 (with drummers on the x-axis). Q = L + 2K (or = aL + 2aK)


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