Indifference Curve and Budget Line (20%) Annie has an income of $240 an hour. Popcorn costs $8 a bag, and costs $6 a six-pack of energy drink a. Draw a graph of Annie’s budget line with six-pack of energy drink on the xaxis, and popcorn on the y-axis. (4%)
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MRTS reaches a manufacturer when a part of the product is lowered to sustain the manufacturing level when the other part is extended. It is the level of the quantity that is lowered when one extra volume is used, and the output is unchanged.
Preferences and Utility Analysis
Before understanding what is preference and utility analysis, it is very important to understand the terms preference and utility separately.
4. Indifference Curve and Budget Line (20%)
Annie has an income of $240 an hour. Popcorn costs $8 a bag, and costs $6 a six-pack of
energy drink
a. Draw a graph of Annie’s budget line with six-pack of energy drink on the xaxis, 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%
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