5. Susan commutes to work. She can either use public transport or her own car. Her indifference curves obey the four properties of indifference curves for ordinary goods. a. Draw Susan’s budget line with car travel on the vertical axis and public transport on the horizontal axis. Suppose that Susan consumes some of both goods. Draw an indifference curve that helps you illustrate her optimal consumption bundle. b. Now the price of public transport falls. Draw Susan’ new budget line? c. For Susan, public transport is an inferior, but not a Giffen, good. Draw an indifference curve that illustrates her optimal consumption bundle after the price of public transport has
5. Susan commutes to work. She can either use public transport or her own car. Her indifference curves obey the four properties of indifference curves for ordinary goods. a. Draw Susan’s budget line with car travel on the vertical axis and public transport on the horizontal axis. Suppose that Susan consumes some of both goods. Draw an indifference curve that helps you illustrate her optimal consumption bundle. b. Now the price of public transport falls. Draw Susan’ new budget line? c. For Susan, public transport is an inferior, but not a Giffen, good. Draw an indifference curve that illustrates her optimal consumption bundle after the price of public transport has
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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5. Susan commutes to work. She can either use public transport or her own car. Her indifference curves obey the four properties of indifference curves for ordinary goods. a. Draw Susan’s budget line with car travel on the vertical axis and public transport on the horizontal axis. Suppose that Susan consumes some of both goods. Draw an indifference curve that helps you illustrate her optimal consumption bundle. b. Now the
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