00 The initial budget constraint (BC¡) shows the Juarezes' budget constraint when the price of a fancy dinner is $100. At this price, Hubert and Kate would choose to consume five fancy dinners. Suppose that the price of a fancy dinner decreases to $50, shifting their budget constraint to BC2, which represents a new relative price of five diner breakfasts per fancy dinner. (Hint: The blue line labeled H is parallel to BC2 and tangent to I at point Y.) In order to remain as happy as they were before the price decrease-that is, to consume at some point on the same indifference curve as they were on initially (I1)-the Juarezes' income spent on fancy dinners and breakfast at diners would now only have to be $ . However, in reality, rather than maintaining their original level of utility, the Juarezes choose the optimal bundle along their new budget constraint. At this point, they are off than before the price change in fancy dinners. On the following table, indicate which point movement represents the substitution effect and income effect for fancy dinners when the price decreases from $100 to $50. Then indicate the consumption change that results from each effect. Consumption Change Fancy Dinners Represented By... (Quantity of fancy dinners) Substitution Effect Income Effect In this case, the price decrease of fancy dinners causes the Juarezes's real income to Because of the change to Hubert and Kate's real income and the direction of the income effect, fancy dinners are for the Juarezes. Grade It Now Save & Continue Continue without saving MacBook Pro Search or type URL 9. B. 女 %24 50 30 DINER BREAKFASTS 9. Income and substitution effects Hubert and Kate Juarez live in San Diego and enjoy going out to fancy restaurants for dinner and to diners for breakfast. On the following diagram, the purple curves I and 2 represent two of their indifference curves for fancy dinners and diner breakfasts. They have $1,000 per month available to spend on eating out. The price of a diner breakfast is always $10. Each labeled point represents the tangency between a budget constraint and the corresponding indifference curve. BC, BC, H. FANCY DINNERS MacBook Pro G Search or type URL 2. 5. 9.