Miss Muffet's Demand Function Analysis
a. What is Miss Muffet's demand function for whey as a function of the price of curds, the price of whey, and her income?
How does Miss Muffet's demand for whey vary based on the price of curds, the price of whey, and her income?
b. If the price of curds is $1 per unit and her income is $20, what is Miss Muffet's demand curve for whey? Is whey an ordinary good or a Giffen good?
What is the specific demand curve for whey when the price of curds is $1 per unit and her income is $20? Is whey considered an ordinary good or a Giffen good in this scenario?
c. If the price of curds is $1 per unit and the price of whey is $0.75 per unit, what is Miss Muffet's Engel curve for whey? Is whey a normal or an inferior good?
How does Miss Muffet's Engel curve for whey change when the price of curds is $1 per unit and the price of whey is $0.75 per unit? Is whey classified as a normal or an inferior good based on this information?
a. Miss Muffet's Demand Function for Whey
Miss Muffet's demand function for whey can be represented as: W = (I - C)/(Pw + 2Pc), where W is the quantity of whey, I is income, C is the cost of curds, Pw is the price of whey, and Pc is the price of curds. This function demonstrates that Miss Muffet's demand for whey is influenced by the prices of curds and whey, as well as her income.
b. Miss Muffet's Demand Curve for Whey
When the price of curds is $1 per unit and her income is $20, Miss Muffet's demand curve for whey is W = (20 - 1)/(0.75 + 2) = 7.27 units. This means that Miss Muffet will demand 7.27 units of whey when the price of curds is $1 per unit and her income is $20. Whey is classified as an ordinary good because as the price of whey decreases, her demand for whey increases.
c. Miss Muffet's Engel Curve for Whey
When the price of curds is $1 per unit and the price of whey is $0.75 per unit, Miss Muffet's Engel curve for whey is W = (I - 1)/(0.75 + 2). This formula indicates that Miss Muffet's demand for whey depends on her income. Whey is considered a normal good, as her demand for it rises alongside her income.
Miss Muffet's approach to consuming curds and whey reflects her preferences for specific ratios. Her demand function and curves for whey provide insights into how her consumption behavior is influenced by prices and income levels. As her income increases, her demand for whey also increases, indicating that whey is a normal good.
Miss Muffet's demand function showcases the interplay of curds and whey prices as well as her income in determining her whey consumption. The demand curve highlights the quantity of whey she would demand under specific price and income conditions. Whey's classification as an ordinary good is supported by the positive relationship between its price and Miss Muffet's demand.
The Engel curve illustrates the relationship between Miss Muffet's income and her demand for whey at varying price levels. Whey's status as a normal good is reinforced by the positive correlation between her income and demand for it.