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. i 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. ii. i. Draw an indifference curve showing the optimum choice. Label the optimum as
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. i 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. ii. i. Draw an indifference curve showing the optimum choice. Label the optimum as
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter6: Consumer Choice And Demand
Section: Chapter Questions
Problem 12PAE
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