Jean's initial budget constraint L', optimal consumption bundle e, , and level of utility i' are illustrated in the figure to the right. Suppose the price of coffee and cream both increase, with the price of coffee increasing by more than the price of cream. 1.) Use the line drawing tool to draw Jean's new budget constraint with the price increases and with her COLA in the figure to the right. Label this line 'L2. 2.) Use the point drawing tool to identify her optimal consumption bundle. Label this point 'e,'. Carefully follow the instructions above, and only draw the required objects. Coffee
Jean's initial budget constraint L', optimal consumption bundle e, , and level of utility i' are illustrated in the figure to the right. Suppose the price of coffee and cream both increase, with the price of coffee increasing by more than the price of cream. 1.) Use the line drawing tool to draw Jean's new budget constraint with the price increases and with her COLA in the figure to the right. Label this line 'L2. 2.) Use the point drawing tool to identify her optimal consumption bundle. Label this point 'e,'. Carefully follow the instructions above, and only draw the required objects. Coffee
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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