Answer to Question #69564 in Microeconomics for Seadya ahmed
A murder has been committed in Nairobi city. The only clue is a grocery receipt left at the scene by the murderer. The receipt shows that 20 bags of crisps selling for ksh. 200 a bag and six-packs of beer selling at ksh. 600 per six pack were bought that day. there are two suspects, Njoroge and Maina The swift. On searching their apartments, The National Security Intelligence Service found the suspects' grocery bills for the previous week. Last week, crisps were selling at ksh. 300 a bah and beer ksh. 500 per six-pack. Njroge bought 35 bags of crisps and 4 packs of peer at those prices while bought 30 bags of crisps and 7 packs of peer. Assumming that even criminals have well-behaved preferences, can you tell who is not the murderer? Explain.
Answer. The condition of optimal consumer’s choice is MRS = PX/PY. Last week, PX/PY=300/(500/6)=3.6. Njroge’s preferences are characterized by the ratio 35/4=8.75 (8.75/3.6=2.43), Maina’s preferences are characterized by the ratio 30/7=4.29 (4.29/3.6=1.19). This week, PX/PY=200/(600/6)=2, and murderer’s preferences are characterized by the ratio 20/6=3.33 (3.33/2=1.67) This week, crisps have become relatively cheaper, compared to beer. So, the one who prefers crisps begins to like them even more. So, Njroge’s can not be the murderer (1.67<2.43).