Lucia lives in Denver and enjoys drinking lattes and eating scones. The price of a latte is held constant at $4 throughout this problem. On the following graph, the purple curves (1₁ and 12) represent two of Lucia's indifference curves. The lines BC₁ and BC₂ show two budget constraints. Points X and Y show Lucia's optimum consumption bundles subject to these budget constraints. 20 18 16 14 12 10 8 6 4 2 LATTES Slope: -2 X-Intercept: 9 Y-Intercept: 18 0 ¹¹/₂ 0 2 4 10 16 18 20 SCONES Given the preceding graph and knowing the price of a latte is $4, Lucia's available income for lattes and scones is 6 BC. 8 12 14 BC

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Chapter1: Making Economics Decisions
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Using the income amount you just computed, complete the following table by finding the price of a scone when BC₁ represents Lucia's budget
constraint and when BC₂ represents her budget constraint. Then indicate the quantity of scones consumed in each of those scenarios.
Price
Consumption
(Scones)
When Lucia's budget constraint is... (Dollars per scone)
BC1
BC₂
Given the price-quantity combinations from the preceding table, use the blue line (circle symbol) to plot Lucia's demand for scones on the following
graph.
Hint: Assume that Lucia's demand for scones is a straight line. You should derive two points on the demand curve from the preceding graph. Then
place the blue line on the following graph so that it passes through these two points.
(?)
10
9
8
PRICE (Dollars per scone)
1
0
0
+
2
4
6
8 10 12
QUANTITY (Scones)
14
16
18
20
Demand
Transcribed Image Text:Using the income amount you just computed, complete the following table by finding the price of a scone when BC₁ represents Lucia's budget constraint and when BC₂ represents her budget constraint. Then indicate the quantity of scones consumed in each of those scenarios. Price Consumption (Scones) When Lucia's budget constraint is... (Dollars per scone) BC1 BC₂ Given the price-quantity combinations from the preceding table, use the blue line (circle symbol) to plot Lucia's demand for scones on the following graph. Hint: Assume that Lucia's demand for scones is a straight line. You should derive two points on the demand curve from the preceding graph. Then place the blue line on the following graph so that it passes through these two points. (?) 10 9 8 PRICE (Dollars per scone) 1 0 0 + 2 4 6 8 10 12 QUANTITY (Scones) 14 16 18 20 Demand
Lucia lives in Denver and enjoys drinking lattes and eating scones. The price of a latte is held constant at $4 throughout this problem.
On the following graph, the purple curves (1₁ and 12) represent two of Lucia's indifference curves. The lines BC₁ and BC₂ show two budget
constraints. Points X and Y show Lucia's optimum consumption bundles subject to these budget constraints.
20
18
16
14
12
10
8
6
4
¹/₂
2
0
2
4
10
16
18 20
SCONES
Given the preceding graph and knowing the price of a latte is $4, Lucia's available income for lattes and scones is
LATTES
0
Slope: -2
X-Intercept: 9
Y-Intercept: 18
6
BC
8
12
14
BC
Transcribed Image Text:Lucia lives in Denver and enjoys drinking lattes and eating scones. The price of a latte is held constant at $4 throughout this problem. On the following graph, the purple curves (1₁ and 12) represent two of Lucia's indifference curves. The lines BC₁ and BC₂ show two budget constraints. Points X and Y show Lucia's optimum consumption bundles subject to these budget constraints. 20 18 16 14 12 10 8 6 4 ¹/₂ 2 0 2 4 10 16 18 20 SCONES Given the preceding graph and knowing the price of a latte is $4, Lucia's available income for lattes and scones is LATTES 0 Slope: -2 X-Intercept: 9 Y-Intercept: 18 6 BC 8 12 14 BC
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