A college student has two options for meals: eating at the dining hall for $6 per meal, or eating a cup of Ramen soup for $1.50 per meal, their weeklyfood budget is $60.Assume that they spend equal amounts on both goods.On the following graph, use the green line (triangle symbol) to draw the college student's budget constraint. Then use the black point (plus symbol) toindicate the initial optimum in this case.Cups of Ramen So5040353O150O 2.6610 12 14Meals at Dining Hall161820Initial Budget Constraint+Initial Optimum (A)New Budget ConstraintNew Optimum (B)Suppose the price of a cup of soup now rises to $2. Assume that the student now spends only 30 percent of their income on dining hall meals.(?)On the preceding graph, use the blue line (circle symbol) to draw the college student's new budget constraint. Then use the grey point (star symbol)to indicate the new optimum in this case.As a result of this price change, the quantity of Ramen soup cups consumedgood, and the income effectThis means that Ramen soup must bethe substitution effect. On the following graph, use the blue line (circle symbol) to draw the student's demand for Ramen soup by plotting the optimum information frompoints A and BPrice4.003503:002.50200150100@101214O TrueO False161820Quantity of Ramen soup22True or False: A cup of Ramen soup is a Giffen good.2426Demand?

A budget line shows various combinations of two goods a consumer can purchase by spending all income…

On the following graph, use the blue line (circle symbol) to draw the student's demand for Ramen soup by plotting the optimum information from points A and B Price 4.00 % % 2.50 200 150 100 . T 10 12 O True 14 O False 16 18 20 Quantity of Ramen soup True or False: A cup of Ramen soup is a Giffen good. 22 24 26 Demand

On the following graph, use the blue line (circle symbol) to draw the student's demand for Ramen soup by plotting the optimum information from points A and B Price 4.00 % % 2.50 200 150 100 . T 10 12 O True 14 O False 16 18 20 Quantity of Ramen soup True or False: A cup of Ramen soup is a Giffen good. 22 24 26 Demand

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter20: Consumer Choice: Maximizing Utility And Behavioral Economics

Section20.1: Utility Theory

Problem 3ST

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Question

A college student has two options for meals: eating at the dining hall for $6 per meal, or eating a cup of Ramen soup for $1.50 per meal, their weekly
food budget is $60.
Assume that they spend equal amounts on both goods.
On the following graph, use the green line (triangle symbol) to draw the college student's budget constraint. Then use the black point (plus symbol) to
indicate the initial optimum in this case.
Cups of Ramen So
50
40
35
3O
15
0
O 2
.
6
610 12 14
Meals at Dining Hall
16
18
20
Initial Budget Constraint
+
Initial Optimum (A)
New Budget Constraint
New Optimum (B)
Suppose the price of a cup of soup now rises to $2. Assume that the student now spends only 30 percent of their income on dining hall meals.
(?)
On the preceding graph, use the blue line (circle symbol) to draw the college student's new budget constraint. Then use the grey point (star symbol)
to indicate the new optimum in this case.
As a result of this price change, the quantity of Ramen soup cups consumed
good, and the income effect
This means that Ramen soup must be
the substitution effect.

On the following graph, use the blue line (circle symbol) to draw the student's demand for Ramen soup by plotting the optimum information from
points A and B
Price
4.00
350
3:00
2.50
200
150
100
@
10
12
14
O True
O False
16
18
20
Quantity of Ramen soup
22
True or False: A cup of Ramen soup is a Giffen good.
24
26
Demand
?

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Picture 1 : A college student has two options for meals: eating at the dining hall for $6 per meal, or eating a package of Cup O' Soup for $2 per meal. Her weekly food budget is $60. Assume that she spends equal amounts on both goods. On the following graph, use the green line (triangle symbol) to draw the college student's budget constraint. Then use the black point (plus symbol) to indicate the initial optimum in this case. Picture 2 : Suppose the price of a Cup O' Soup now rises to $3. Assume that the student now spends only 20 percent of her income on dining hall meals. On the preceding graph, use the blue line (circle symbol) to draw the college student's new budget constraint. Then use the grey point (star symbol) to indicate the new optimum in this case. As a result of this price change, the quantity of Cup O' Soup packages consumed ( decreased , increase ) ? This means that Cup O' Soup must be (a normal , an inferior) ? good, and the income effect (…
A college student has two options for meals: eating at the dining hall for $6 per meal, or eating a cup of Ramen soup for $1.50 per meal. their weekly food budget is $60. Assume that they spend equal amounts on both goods. On the following graph, use the green line (triangle symbol) to draw the college student's budget constraint. Then use the black point (plus symbol) to indicate the initial optimum in this case. 50 45 ss Tips 40 s Tips UT Cups of Ramen Soup 2 8 8 33 10 5 0 o 2 4 6 8 10 12 14 16 18 20 Meals at Dining Hall A Initial Budget Constraint Initial Optimum (A) New Budget Constraint New Optimum (B) ? 13
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