Joan has the following utility function U = 4x + 4y. a. Describe her preferences for these two goods. b. Draw a consumer choice graph describing her indifference curve when income $120, the price of x is $5 and the price of y is $4. C. Draw the demand for x as the price falls to $4.01, and then to $3.99, and then $3. Describe or illustrate in a graph the income and substitution effects as the price of x falls.
Joan has the following utility function U = 4x + 4y. a. Describe her preferences for these two goods. b. Draw a consumer choice graph describing her indifference curve when income $120, the price of x is $5 and the price of y is $4. C. Draw the demand for x as the price falls to $4.01, and then to $3.99, and then $3. Describe or illustrate in a graph the income and substitution effects as the price of x falls.
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter6: Consumer Choice And Demand
Section: Chapter Questions
Problem 13PAE
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