### Problems and Applications Q1#### STEP: 1 of 2**1. Effect on Budget Constraint****2. Effect on Optimum**Maya divides her income between coffee and croissants (both of which are normal goods). Exceptionally good weather conditions in Brazil cause a large decrease in the price of coffee in the United States.**Question:**On the following graph, show the effect of the good weather conditions on Maya’s budget constraint (BC).#### Graph Explanation:In the provided graph, there are two axes:- The vertical axis represents the quantity of **Coffee**.- The horizontal axis represents the quantity of **Croissants**.There is a budget constraint line labeled **BC** that shows the maximum combination of coffee and croissants that Maya can afford given her budget. Due to the good weather conditions in Brazil, the price of coffee decreases.- **Budget Constraint Line (BC)**: The new budget constraint should pivot outward, indicating that with the same budget, Maya can now afford more coffee due to the decrease in its price, while the quantity of croissants she can afford remains unchanged.The graph effectively illustrates the concept of budget constraints and how a change in the price of one good affects the consumer's purchasing possibilities. The **pivot** shows an increase in the quantity of coffee for the same budget, signifying the impact of the price reduction.![Graph](https://via.placeholder.com/300x200.png)

A budget constraint is a concept in economics that describe the limitations or restrictions on the…

Maya divides her income between coffee and croissants (both of which are normal goods). Exceptionally good weather conditions in Brazil cause a large decrease in the price of coffee in the United States.

Maya divides her income between coffee and croissants (both of which are normal goods). Exceptionally good weather conditions in Brazil cause a large decrease in the price of coffee in the United States.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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