Typed answer please asap sir please 1. Use the following information to answer the questions below. Suppose that a consumer choosesto consume a bundle of two different goods, respectively denoted as good 1 and good 2. Theconsumer has income m to spend on the two goods, and the prices the consumer faces for goods1 and 2 are denoted by p₁ and p2.(a) Write down an equation for the consumer's budget constraint.(b) Using your answer for part la diagram the consumer's budget constraint.(c) In your diagram for the consumer's budget constraint, identify and label the consumer's"choice set".(d) Will the consumer's choice of any of the bundles in the choice set affect the prices of goods1 and 2? Why, or why not?2. Using the budget constraint you diagramed in question [I answer the questions below:(a) Redraw the diagram of the budget constraint from question 1b. Suppose that the price ofgood 1 increases from pi to p₁. Draw the new budget constraint reflecting the higher priceP₁.(b) Starting again from the budget constraint in question 1b, now suppose that the price ofgood 2 decreases from pa to p₂. Draw the new budget constraint reflecting the lower priceP'2-(c) What happens to the consumer's budget constraint if prices change as in parts 2a and 2bwhile the consumer's income increases from m to m'? Diagram the result.(d) Suppose that the price of good 1 decreases by 50% if the consumer purchases more thantwo units of the good. Diagram the budget constraint for this scenario.

Consumer theory is essential in economics as it examines how individuals optimize their satisfaction…

1. Use the following information to answer the questions below. Suppose that a consumer chooses to consume a bundle of two different goods, respectively denoted as good 1 and good 2. The consumer has income m to spend on the two goods, and the prices the consumer faces for goods 1 and 2 are denoted by p₁ and p2. (a) Write down an equation for the consumer's budget constraint. (b) Using your answer for part la diagram the consumer's budget constraint. (e) In your diagram for the consumer's budget constraint, identify and label the consumer's "choice set". (d) Will the consumer's choice of any of the bundles in the choice set affect the prices of goods 1 and 2? Why, or why not?

1. Use the following information to answer the questions below. Suppose that a consumer chooses to consume a bundle of two different goods, respectively denoted as good 1 and good 2. The consumer has income m to spend on the two goods, and the prices the consumer faces for goods 1 and 2 are denoted by p₁ and p2. (a) Write down an equation for the consumer's budget constraint. (b) Using your answer for part la diagram the consumer's budget constraint. (e) In your diagram for the consumer's budget constraint, identify and label the consumer's "choice set". (d) Will the consumer's choice of any of the bundles in the choice set affect the prices of goods 1 and 2? Why, or why not?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Step 1: Describe the significance of consumer theory

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Step 2: Write down an equation for the consumer's budget constraint

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Step 3: Draw the consumer's budget constraint.

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Step 4: Identify the consumer's "choice set"

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Step 5: Explain if the consumer's choice of any of the bundles in the choice set affect the prices

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