Note: The answer should be typed. An individual sets aside a certain amount of his income per month to spend on his two hobbies,collecting wine and collecting books. Given the information below, illustrate the price-consumptionline associated with changes in the price of wine.WinePrice$10$20$40BookPrice$8$8$8Wine402010Books505050BudgetSADO$800SBDO1.) Using the line drawing tool, draw a budget line when the price of wine is $10 per bottle. Labelthis line12.) Using the point drawing tool add the corresponding satisfaction maximizing bundle. Label thispoint 'A'.Carefully follow the instructions above, and only draw the required objects.3.) Using the line drawing lool, draw a budget line when the price of wine is 520 per bolle. Labelthis line L4.) Using the point drawing tool, then add the corresponding satisfaction-maximizing bundle. Labelthis point 'B'.Carefully follow the matructions above, and only draw the required objectaBooks100-90-00-70no-40-30-20-10-0+D10 20 3040 30 60 70 80Wine00100

The Price Consumption Curve (PCC) is a concept in microeconomics that illustrates the effect of…

An individual sets aside a certain amount of his income per month to spend on his two hobbies, collecting wine and collecting books. Given the information below, illustrate the price-consumption line associated with changes in the price of wine.

An individual sets aside a certain amount of his income per month to spend on his two hobbies, collecting wine and collecting books. Given the information below, illustrate the price-consumption line associated with changes in the price of wine.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Note: The answer should be typed.

An individual sets aside a certain amount of his income per month to spend on his two hobbies,
collecting wine and collecting books. Given the information below, illustrate the price-consumption
line associated with changes in the price of wine.
Wine
Price
$10
$20
$40
Book
Price
$8
$8
$8
Wine
40
20
10
Books
50
50
50
Budget
SADO
$800
SBDO
1.) Using the line drawing tool, draw a budget line when the price of wine is $10 per bottle. Label
this line
1
2.) Using the point drawing tool add the corresponding satisfaction maximizing bundle. Label this
point 'A'.
Carefully follow the instructions above, and only draw the required objects.
3.) Using the line drawing lool, draw a budget line when the price of wine is 520 per bolle. Label
this line L
4.) Using the point drawing tool, then add the corresponding satisfaction-maximizing bundle. Label
this point 'B'.
Carefully follow the matructions above, and only draw the required objecta
Books
100-
90-
00-
70
no-
40-
30-
20-
10-
0+
D
10 20 30
40 30 60 70 80
Wine
00
100

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Step 1: Define Price consumption curve

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Step 2: Draw budget line and bundle of goods

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Step 3: Draw PCC

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