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
icon
Related questions
Question
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 is
$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 to
$3. Describe or illustrate in a graph the income and substitution effects as the
price of x falls.
Transcribed Image Text: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 is $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 to $3. Describe or illustrate in a graph the income and substitution effects as the price of x falls.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Knowledge Booster
Utility Maximization
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Microeconomics A Contemporary Intro
Microeconomics A Contemporary Intro
Economics
ISBN:
9781285635101
Author:
MCEACHERN
Publisher:
Cengage
Economics For Today
Economics For Today
Economics
ISBN:
9781337613040
Author:
Tucker
Publisher:
Cengage Learning
Micro Economics For Today
Micro Economics For Today
Economics
ISBN:
9781337613064
Author:
Tucker, Irvin B.
Publisher:
Cengage,
Microeconomics: Principles & Policy
Microeconomics: Principles & Policy
Economics
ISBN:
9781337794992
Author:
William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:
Cengage Learning
Principles of Microeconomics
Principles of Microeconomics
Economics
ISBN:
9781305156050
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Microeconomic Theory
Microeconomic Theory
Economics
ISBN:
9781337517942
Author:
NICHOLSON
Publisher:
Cengage