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Maria likes to use 1 squirt of shampoo (good x) and 1 squirt of conditioner (good y) every time she washes her hair. Let' say that the more she wash her a) Draw a set of indifference curves illustrating Maria's preferences and her level of utility from washing her hair one time per day (U₁) and two times per day (U₂). Show the direction of her preferences assuming her level of utility increases with more washes. Label your graph (i.e., label axes and indifference curves). b) Assume that shampoo costs px = $4, conditioner costs Py = $2 and her income to spend on these two goods is I = $12. Write the equation of her budget line and plot it on the same graph from (a). Label the budget line as BL₁.

Maria likes to use 1 squirt of shampoo (good x) and 1 squirt of conditioner (good y) every time she washes her hair. Let' say that the more she wash her a) Draw a set of indifference curves illustrating Maria's preferences and her level of utility from washing her hair one time per day (U₁) and two times per day (U₂). Show the direction of her preferences assuming her level of utility increases with more washes. Label your graph (i.e., label axes and indifference curves). b) Assume that shampoo costs px = $4, conditioner costs Py = $2 and her income to spend on these two goods is I = $12. Write the equation of her budget line and plot it on the same graph from (a). Label the budget line as BL₁.

Exploring Economics
Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter10: Consumer Choice Theory
Section: Chapter Questions
Problem 9P
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Show full answers for part a) b) and c)
**Maria's Hair Washing Preferences: An Economic Analysis** Maria likes to use 1 squirt of shampoo (good x) and 1 squirt of conditioner (good y) every time she washes her hair. Let's say that the more she washes her hair, the more she enjoys it. **a) Indifference Curves for Maria's Preferences** - **Task**: Draw indifference curves illustrating Maria’s preferences and her level of utility from washing her hair one time per day (U₁) and two times per day (U₂). - **Direction of Preferences**: Show that her level of utility increases with more washes. - **Graph Labeling**: Ensure to label your graph (axes and indifference curves). **b) Budget Constraint at Current Prices** - **Assumptions**: Shampoo costs \( p_x = $4 \), conditioner costs \( p_y = $2 \), and her income for these goods is \( I = $12 \). - **Equation and Plotting**: Write the equation of her budget line and plot it on the graph from part (a). Label the budget line as BL₁. - **Optimal Bundle**: Determine the combination of shampoo and conditioner that gives Maria the highest utility within her budget. **c) Impact of Price Change** - **New Prices**: Shampoo now costs \( p'_x = $2 \) and conditioner \( p'_y = $4 \). - **Updated Budget Line**: On the same graph from part (a), plot her new budget line and label it as BL₂. - **Effect on Optimal Bundle**: Analyze the impact on Maria’s optimal bundle. Can Maria achieve a higher level of utility than in part (b)? Explain your reasoning. This exploration helps us understand consumer behavior and how price changes can affect purchasing decisions and overall satisfaction.
Transcribed Image Text:**Maria's Hair Washing Preferences: An Economic Analysis** Maria likes to use 1 squirt of shampoo (good x) and 1 squirt of conditioner (good y) every time she washes her hair. Let's say that the more she washes her hair, the more she enjoys it. **a) Indifference Curves for Maria's Preferences** - **Task**: Draw indifference curves illustrating Maria’s preferences and her level of utility from washing her hair one time per day (U₁) and two times per day (U₂). - **Direction of Preferences**: Show that her level of utility increases with more washes. - **Graph Labeling**: Ensure to label your graph (axes and indifference curves). **b) Budget Constraint at Current Prices** - **Assumptions**: Shampoo costs \( p_x = $4 \), conditioner costs \( p_y = $2 \), and her income for these goods is \( I = $12 \). - **Equation and Plotting**: Write the equation of her budget line and plot it on the graph from part (a). Label the budget line as BL₁. - **Optimal Bundle**: Determine the combination of shampoo and conditioner that gives Maria the highest utility within her budget. **c) Impact of Price Change** - **New Prices**: Shampoo now costs \( p'_x = $2 \) and conditioner \( p'_y = $4 \). - **Updated Budget Line**: On the same graph from part (a), plot her new budget line and label it as BL₂. - **Effect on Optimal Bundle**: Analyze the impact on Maria’s optimal bundle. Can Maria achieve a higher level of utility than in part (b)? Explain your reasoning. This exploration helps us understand consumer behavior and how price changes can affect purchasing decisions and overall satisfaction.
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