Answer to Question #121170 in Microeconomics for maaz

Question

For each of the following events, consider how you might react. What things might you consume more or less of? Are your responses consistent with the discussion of household behavior?
1. You have a very close friend who lives in another city, a 3-hour bus ride away. The price of a round-trip ticket rises from $20 to $45.
2. Tuition at your college is cut 25 percent
3. You receive an award that pays you $300 per month for the next 5 years.
4. The price of food doubles. (If you are on a meal plan, assume that your board charges double.)

Answer 1

1. As the price rises from 20 $ to 45 $ so my frequency of visiting in friends home will also decreases. It will become once in month.Previously it was once in a week.It does not effect our relation.
2. There will be no change as the tuition classes i needed it will remain same. It can not change with price.As it is necessity.
3. If i will receive 300$ per month then my consumption of some extra thing will increase but it does not change my behavior.
4. As i m receiving extra money so if price of food double then also it will not effect on my food.