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 ( outweighed , was dominted by) ?     the substitution effect.   On the following graph, use the blue line (circle symbol) to draw the student's demand for Cup O' Soup by plotting the optimum information from points A and B.   True or False: Cup O' Soup is a Giffen good.   True or False

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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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 ( outweighed , was dominted by) ?     the substitution effect.
 
On the following graph, use the blue line (circle symbol) to draw the student's demand for Cup O' Soup by plotting the optimum information from points A and B.
 
True or False: Cup O' Soup is a Giffen good.
 
True
or
False
 
 
Sear
Problems & Applications (Ch 21)
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
This means that Cup O' Soup must be
good, and the income effect
the substitution effect.
On the following graph, use the blue line (circle symbol) to draw the student's demand for Cup O' Soup by plotting the optimum information from
points A and B.
4.00
3.50
Demand
3.00
2.50
2.00
1.50
1.00
合
Transcribed Image Text:Sear Problems & Applications (Ch 21) 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 This means that Cup O' Soup must be good, and the income effect the substitution effect. On the following graph, use the blue line (circle symbol) to draw the student's demand for Cup O' Soup by plotting the optimum information from points A and B. 4.00 3.50 Demand 3.00 2.50 2.00 1.50 1.00 合
Busnapshotld%3D21195098L
Problems & Applications (Ch 21)
Q Search th
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.
50
45
Initial Budget Constraint
40
35
Initial Optimum (A)
30
25
20
New Budget Constraint
15
10
New Optimum (B)
W
hp
|耳a
Packages of Cup 0' Soup
Transcribed Image Text:Busnapshotld%3D21195098L Problems & Applications (Ch 21) Q Search th 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. 50 45 Initial Budget Constraint 40 35 Initial Optimum (A) 30 25 20 New Budget Constraint 15 10 New Optimum (B) W hp |耳a Packages of Cup 0' Soup
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