2. For the Income-Consumption Line & Engel Curve: (kindly place Good A on the X-axis & Good B on the Y-axis) If the consumer's tastes are given by the Indifference curves schedule and Pa = P1.00, Pb = P1.00 and original budget = P10.00, what happens if budget decreases to P6.00 and then increases to P14.00, assuming that tastes and prices of the two goods are constant. Create the new budget schedules. Plot the 2 new budget lines as well as the original with the 3 indifference curves together and determine the tangency points or LCPC and create the Income- Consumption Line.

2. For the Income-Consumption Line & Engel Curve: (kindly place Good A on the X-axis & Good B on the Y-axis) If the consumer's tastes are given by the Indifference curves schedule and Pa = P1.00, Pb = P1.00 and original budget = P10.00, what happens if budget decreases to P6.00 and then increases to P14.00, assuming that tastes and prices of the two goods are constant. Create the new budget schedules. Plot the 2 new budget lines as well as the original with the 3 indifference curves together and determine the tangency points or LCPC and create the Income- Consumption Line.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.4P

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