See attached Kai-Li Tsai, Ph.D.4. Indifference Curve and Budget Line (20%)Annie has an income of $160 an hour. Popcorn costs $5 a bag, and costs $4 a six-pack ofenergy drinka. Draw a graph of Annie’s budget line with six-pack of energy drink on the x-axis, and popcorn on the y-axis. (4%)b. What is the slope of Annie's budget line (2%)? What could this slope be alsocalled? (2%)c. If we know that Annie maximizes her utility with the purchase of 20 bags ofpopcorn, how many six-pack energy drink she will purchase?-(an estimatefrom your graph & actual calculation) (5%), draw an indifference curvereflecting this optimum. (5%)5. Income Effect & Substitution Effect (20%)- (still use budget line with energy drinkon the x-axis, and popcorn on the y-axis).If Annie's hourly income remains $160. The price of energy drink is on sale anddrops to $2 a six-pack of can energy drink, while the price of popcorn remainsat $5 a bag.a. Draw the new budget line(s) (with energy drink on the x-axis, and popcorn onthe y-axis) (5%)b. Use indifference curve to identify the change in quantity purchased (5%)c. and illustrate the income effects (points and distance) (10%) and substitutioneffects (points & distance) (5%)

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4. Indifference Curve and Budget Line (20%) Annie has an income of $160 an hour. Popcorn costs $5 a bag, and costs $4 a six-pack of energy drink a. Draw a graph of Annie's budget line with six-pack of energy drink on the x- axis, and popcorn on the y-axis. (4%) b. What is the slope of Annie's budget line (2%)? What could this slope be also called? (2%) c. If we know that Annie maximizes her utility with the purchase of 20 bags of popcorn, how many six-pack energy drink she will purchase?-(an estimate from your graph & actual calculation) (5%), draw an indifference curve reflecting this optimum. (5%)

4. Indifference Curve and Budget Line (20%) Annie has an income of $160 an hour. Popcorn costs $5 a bag, and costs $4 a six-pack of energy drink a. Draw a graph of Annie's budget line with six-pack of energy drink on the x- axis, and popcorn on the y-axis. (4%) b. What is the slope of Annie's budget line (2%)? What could this slope be also called? (2%) c. If we know that Annie maximizes her utility with the purchase of 20 bags of popcorn, how many six-pack energy drink she will purchase?-(an estimate from your graph & actual calculation) (5%), draw an indifference curve reflecting this optimum. (5%)

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section6.A: Indifference Curve Analysis

Problem 3SQP

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