Can I get the answer for questions iv and v Mrs. Griffiths earns $5000 a week and spends her entire income on dresses and handbags,since these are the only two items that provide her utility. Furthermore, Mrs. Griffithsinsists that for every dress she buys, she must also buy a handbag.What is the algebraic equation for Mrs. Griffiths budget constraint if dresses costS25 each and handbags cost $14 each? How many of each good will she buy andrepresent this on a budget line with handbags on the horizontal axis.Draw an indifference curve showing the optimum choice. Label the optimum asi.i.3.point A. What would be the marginal rate of substitution at the point thatcorresponds to the optimal consumption choice? Interpret the marginal rate ofsubstitution.i. Suppose the price of a dresses increases to $200 and income decreases to $4200.What is the new algebraic equation for Mrs. Griffiths budget constraint? Show theimpact of the new budget line relative to the original budget lineWhat would be the new marginal rate of substitution that corresponds to theoptimal consumption choice? Interpret the marginal rate of substitution.Assume for this question only that when the price of dresses decreases, less ofthat good is demanded. Illustrate the income and substitution effect of this pricedecreaseiv.V.

According to the question given that the income of the Mrs Griffths was 5000 and budget line…

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Can I get the answer for questions iv and v

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter10: Consumer Choice Theory

Section: Chapter Questions

Problem 8P

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Question

Can I get the answer for questions iv and v

Mrs. Griffiths earns $5000 a week and spends her entire income on dresses and handbags,
since these are the only two items that provide her utility. Furthermore, Mrs. Griffiths
insists that for every dress she buys, she must also buy a handbag.
What is the algebraic equation for Mrs. Griffiths budget constraint if dresses cost
S25 each and handbags cost $14 each? How many of each good will she buy and
represent this on a budget line with handbags on the horizontal axis.
Draw an indifference curve showing the optimum choice. Label the optimum as
i.
i.
3.
point A. What would be the marginal rate of substitution at the point that
corresponds to the optimal consumption choice? Interpret the marginal rate of
substitution.
i. Suppose the price of a dresses increases to $200 and income decreases to $4200.
What is the new algebraic equation for Mrs. Griffiths budget constraint? Show the
impact of the new budget line relative to the original budget line
What would be the new marginal rate of substitution that corresponds to the
optimal consumption choice? Interpret the marginal rate of substitution.
Assume for this question only that when the price of dresses decreases, less of
that good is demanded. Illustrate the income and substitution effect of this price
decrease
iv.
V.

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