Maria likes to use 1 squirt of shampoo (good x) and 1 squirt of conditioner (good y) every time she washes her hair. Let' say that the more she wash her a) Draw a set of indifference curves illustrating Maria's preferences and her level of utility from washing her hair one time per day (U₁) and two times per day (U₂). Show the direction of her preferences assuming her level of utility increases with more washes. Label your graph (i.e., label axes and indifference curves). b) Assume that shampoo costs px = $4, conditioner costs Py = $2 and her income to spend on these two goods is I = $12. Write the equation of her budget line and plot it on the same graph from (a). Label the budget line as BL₁.
Maria likes to use 1 squirt of shampoo (good x) and 1 squirt of conditioner (good y) every time she washes her hair. Let' say that the more she wash her a) Draw a set of indifference curves illustrating Maria's preferences and her level of utility from washing her hair one time per day (U₁) and two times per day (U₂). Show the direction of her preferences assuming her level of utility increases with more washes. Label your graph (i.e., label axes and indifference curves). b) Assume that shampoo costs px = $4, conditioner costs Py = $2 and her income to spend on these two goods is I = $12. Write the equation of her budget line and plot it on the same graph from (a). Label the budget line as BL₁.
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section6.A: Indifference Curve Analysis
Problem 3SQP
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Show full answers for part a) b) and c)
![Maria likes to use 1 squirt of shampoo (good x) and 1 squirt of conditioner
(good y) every time she washes her hair. Let' say that the more she wash her
a) Draw a set of indifference curves illustrating Maria's preferences and her level of
utility from washing her hair one time per day (U₁) and two times per day (U₂). Show the
direction of her preferences assuming her level of utility increases with more washes.
Label your graph (i.e., label axes and indifference curves).
b) Assume that shampoo costs px = $4, conditioner costs py = $2 and her income to spend
on these two goods is I = $12. Write the equation of her budget line and plot it on the
same graph from (a). Label the budget line as BL₁.
Next, by looking at your graph, what is her optimal bundle? [Hint: Her optimal bundle
is the amount of shampoo and conditioner providing her with the highest possible level of
utility given her budget constraint and following her preferences]
=
c) Suppose that prices change so that shampoo now costs px = $2 and conditioner costs py
$4. On the same graph from (a), plot her new budget line and label it as BL2. What is
likely to happen to Maria's optimal bundle as a result? Can she achieve a higher level of
utility than in (b)? Explain.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa3574180-5be7-46af-9f18-c1fbb9ec682c%2F9bff71a1-3290-4739-b08f-1dccd1433eee%2Foz1l11n_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Maria likes to use 1 squirt of shampoo (good x) and 1 squirt of conditioner
(good y) every time she washes her hair. Let' say that the more she wash her
a) Draw a set of indifference curves illustrating Maria's preferences and her level of
utility from washing her hair one time per day (U₁) and two times per day (U₂). Show the
direction of her preferences assuming her level of utility increases with more washes.
Label your graph (i.e., label axes and indifference curves).
b) Assume that shampoo costs px = $4, conditioner costs py = $2 and her income to spend
on these two goods is I = $12. Write the equation of her budget line and plot it on the
same graph from (a). Label the budget line as BL₁.
Next, by looking at your graph, what is her optimal bundle? [Hint: Her optimal bundle
is the amount of shampoo and conditioner providing her with the highest possible level of
utility given her budget constraint and following her preferences]
=
c) Suppose that prices change so that shampoo now costs px = $2 and conditioner costs py
$4. On the same graph from (a), plot her new budget line and label it as BL2. What is
likely to happen to Maria's optimal bundle as a result? Can she achieve a higher level of
utility than in (b)? Explain.
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