Utility maximizing, substitution effectI have A-C answered, just need parts D-G, graph is included Riley has $6 to spend on ramen and apps for their phone. The price of a bowl of ramen is$2, and the price of an app is $1. Riley's preferences for ramen and apps are representedby the indifference curves on the next page.a. Determine which line (L1, L2, L3, L4, or L5) represents Riley's budgetconstraint.b. Find the utility-maximizing bundle for Riley (E1, E2, E3, E4, or E5). Determinehow many bowls of ramen Riley will buy.Suppose now that the price of a bowl of ramen is discounted for students to $1 per bowl.c. Determine which line (L1, L2, L3, L4, or L5) represents Riley's new budgetconstraint.d. Find the new utility-maximizing bundle for Riley (E1, E2, E3, E4, or E5).Determine how many bowls of Ramen Riley will now buy.e. Find the size and direction (positive or negative) of the substitution effect. Aspart of your answer, state the starting quantity and ending quantity of bowls oframen that represent this effect.f. Find the size and direction (positive or negative) of the income effect. As part ofyour answer, state the starting quantity and ending quantity of bowls of ramen thatrepresent this effect.g. Based on your answers to parts e and f, is ramen a normal or an inferior good forRiley? ROBLEMAppolWeek3E,Eg

(Note: Only parts d, e, f have been solved). A consumer attains his equilibrium or highest…

d. Find the new utility-maximizing bundle for Riley (E1, E2, E3, E4, or E5). Determine how many bowls of Ramen Riley will now buy. e. Find the size and direction (positive or negative) of the substitution effect. As part of your answer, state the starting quantity and ending quantity of bowls of ramen that represent this effect. f. Find the size and direction (positive or negative) of the income effect. As part of your answer, state the starting quantity and ending quantity of bowls of ramen that represent this effect.

d. Find the new utility-maximizing bundle for Riley (E1, E2, E3, E4, or E5). Determine how many bowls of Ramen Riley will now buy. e. Find the size and direction (positive or negative) of the substitution effect. As part of your answer, state the starting quantity and ending quantity of bowls of ramen that represent this effect. f. Find the size and direction (positive or negative) of the income effect. As part of your answer, state the starting quantity and ending quantity of bowls of ramen that represent this effect.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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