Suppose that you have an income of $20 to spend on sticky hands and gumballs. Both cost $1.00. a. Solve for the budget constraint in y = mx + b form, using gumballs as your x variable. Graph the budget constraint. Draw an indifference curve such that the optimal consumption bundle is 10 gumballs and 10 sticky hands. b. Suppose that the price of sticky hands falls to 50 cents. Draw the new budget constraint, original budget constraint from a.) and original indifference curve from a.) in a new graph. Draw a new optimal in indifference curve such that gumballs and sticky hands are complements and sticky hands are inferior goods.
Suppose that you have an income of $20 to spend on sticky hands and gumballs. Both cost $1.00. a. Solve for the budget constraint in y = mx + b form, using gumballs as your x variable. Graph the budget constraint. Draw an indifference curve such that the optimal consumption bundle is 10 gumballs and 10 sticky hands. b. Suppose that the price of sticky hands falls to 50 cents. Draw the new budget constraint, original budget constraint from a.) and original indifference curve from a.) in a new graph. Draw a new optimal in indifference curve such that gumballs and sticky hands are complements and sticky hands are inferior goods.
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Theory Of Consumer Choice
Section: Chapter Questions
Problem 1PA
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SOLVE QUESTION B ONLY
Suppose that you have an income of $20 to spend on sticky hands and gumballs. Both cost $1.00.
a. Solve for the budget constraint in y = mx + b form, using gumballs as your x variable. Graph the budget constraint. Draw an indifference curve such that the optimal consumption bundle is 10 gumballs and 10 sticky hands.
b. Suppose that the
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