There Are Two Goods In The Economy: Beer And Chicken Wings

There Are Two Goods In The Economy Beer And Chicken Wings The Governm

There are two goods in the economy: beer and chicken wings. The government believes that beer is bad for you, so it imposes a tax of 166% on beer. The price of one beer is 96, and the price of one order of chicken wings is 33. How many orders of chicken wings does the consumer have to give up to get 25 orders of beer, considering the tax on beer?

To analyze this, first consider the pre-tax price of a beer, which is 96. However, with the 166% tax, the effective price of a beer becomes:

Effective price of beer = 96 + (166% of 96) = 96 + (1.66 × 96) = 96 + 159.36 = 255.36.

This means each beer costs the consumer approximately 255.36 units after tax. Since the consumer wants 25 beers, the total expenditure on beer is:

Total cost for 25 beers = 25 × 255.36 = 6,384 units.

Next, to determine how many chicken wings the consumer must give up, consider the price of one order of chicken wings, which is 33 units. The opportunity cost of purchasing 25 beers in terms of chicken wings is therefore:

Number of chicken wing orders foregone = Total beer expenditure / Price per chicken wing order = 6,384 / 33 ≈ 193.09.

Thus, the consumer must give up approximately 193 orders of chicken wings to afford 25 beers, given the tax and prices involved.

Hypotheses for Comparing Milk Chocolate and Mint Filled Milk Chocolate Sales

The chocolate producer is examining whether the average sales of milk chocolate truffles are at least the same as the sales of mint-filled milk chocolate truffles during the holiday season. They have collected samples with the following data:

• Milk chocolate: sample mean = 12 million, sample standard deviation = 2.5 million, n=18
• Mint chocolate: sample mean = 13.5 million, sample standard deviation = 2.3 million, n=18

Since the variances are unknown but assumed equal and the samples are independent, the appropriate hypotheses involve the difference between the two population means, μ₁ (milk chocolate) and μ₂ (mint chocolate).

Specifically, to test whether the average sales of milk chocolate are at least the same as mint chocolate, the relevant hypotheses are:

• Null Hypothesis, H₀: μ₁ - μ₂ ≥ 0, meaning milk chocolate sales are at least as high as mint chocolate sales.
• Alternative Hypothesis, H₁: μ₁ - μ₂

Among the options provided, the correct set of hypotheses is:

(A) H₀: μ₁ - μ₂ ≥ 0, H₁: μ₁ - μ₂ .

Conclusion

In conclusion, consumers face a significant opportunity cost when purchasing alcohol, especially with high taxation increasing the effective price. Understanding the trade-offs involved helps consumers make informed decisions. Additionally, formulating accurate hypotheses is essential in assessing whether different chocolate truffle varieties have statistically significant differences in sales, guiding product strategies during peak seasons.

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