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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)
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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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.
Transcribed Image Text: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 ?
Transcribed Image Text: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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