Picture 1 : A college student has two options for meals: eating at the dining hall for $6 per meal, or eating a package of Cup O' Soup for $2 per meal. Her weekly food budget is $60.Assume that she spends equal amounts on both goods.On the following graph, use the green line (triangle symbol) to draw the college student's budget constraint. Then use the black point (plus symbol) to indicate the initial optimum in this case. Picture 2 :Suppose the price of a Cup O' Soup now rises to $3. Assume that the student now spends only 20 percent of her income on dining hall meals. On the preceding graph, use the blue line (circle symbol) to draw the college student's new budget constraint. Then use the grey point (star symbol) to indicate the new optimum in this case. As a result of this price change, the quantity of Cup O' Soup packages consumed ( decreased , increase ) ? This means that Cup O' Soup must be (a normal , an inferior) ? good, and the income effect ( outweighed , was dominted by) ? the substitution effect. On the following graph, use the blue line (circle symbol) to draw the student's demand for Cup O' Soup by plotting the optimum information from points A and B. True or False: Cup O' Soup is a Giffen good. TrueorFalse SearProblems & Applications (Ch 21)On the preceding graph, use the blue line (circle symbol) to draw the college student's new budget constraint. Then use the grey point (star symbol)to indicate the new optimum in this case.As a result of this price change, the quantity of Cup O' Soup packages consumedThis means that Cup O' Soup must begood, and the income effectthe substitution effect.On the following graph, use the blue line (circle symbol) to draw the student's demand for Cup O' Soup by plotting the optimum information frompoints A and B.4.003.50Demand3.002.502.001.501.00合 Busnapshotld%3D21195098LProblems & Applications (Ch 21)Q Search thA college student has two options for meals: eating at the dining hall for $6 per meal, or eating a package of Cup O' Soup for $2 per meal. Her weeklyfood budget is $60.Assume that she spends equal amounts on both goods.On the following graph, use the green line (triangle symbol) to draw the college student's budget constraint. Then use the black point (plus symbol) toindicate the initial optimum in this case.5045Initial Budget Constraint4035Initial Optimum (A)302520New Budget Constraint1510New Optimum (B)Whp|耳aPackages of Cup 0' Soup

The total income of that student is $60. She spends equal amount on both the goods. Thus, she will…

Picture 1 : A college student has two options for meals: eating at the dining hall for $6 per meal, or eating a package of Cup O' Soup for $2 per meal. Her weekly food budget is $60. Assume that she spends equal amounts on both goods. On the following graph, use the green line (triangle symbol) to draw the college student's budget constraint. Then use the black point (plus symbol) to indicate the initial optimum in this case. Picture 2 : Suppose the price of a Cup O' Soup now rises to $3. Assume that the student now spends only 20 percent of her income on dining hall meals. On the preceding graph, use the blue line (circle symbol) to draw the college student's new budget constraint. Then use the grey point (star symbol) to indicate the new optimum in this case. As a result of this price change, the quantity of Cup O' Soup packages consumed ( decreased , increase ) ? This means that Cup O' Soup must be (a normal , an inferior) ? good, and the income effect ( outweighed , was dominted by) ? the substitution effect. On the following graph, use the blue line (circle symbol) to draw the student's demand for Cup O' Soup by plotting the optimum information from points A and B. True or False: Cup O' Soup is a Giffen good. True or False

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.2P

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Question

Picture 1 : A college student has two options for meals: eating at the dining hall for $6 per meal, or eating a package of Cup O' Soup for $2 per meal. Her weekly food budget is $60.

Assume that she spends equal amounts on both goods.

On the following graph, use the green line (triangle symbol) to draw the college student's budget constraint. Then use the black point (plus symbol) to indicate the initial optimum in this case.

Picture 2 :

Suppose the price of a Cup O' Soup now rises to $3. Assume that the student now spends only 20 percent of her income on dining hall meals.

On the preceding graph, use the blue line (circle symbol) to draw the college student's new budget constraint. Then use the grey point (star symbol) to indicate the new optimum in this case.

As a result of this price change, the quantity of Cup O' Soup packages consumed ( decreased , increase ) ?

This means that Cup O' Soup must be (a normal , an inferior) ? good, and the income effect ( outweighed , was dominted by) ? the substitution effect.

On the following graph, use the blue line (circle symbol) to draw the student's demand for Cup O' Soup by plotting the optimum information from points A and B.

True or False: Cup O' Soup is a Giffen good.

True

False

Sear
Problems & Applications (Ch 21)
On the preceding graph, use the blue line (circle symbol) to draw the college student's new budget constraint. Then use the grey point (star symbol)
to indicate the new optimum in this case.
As a result of this price change, the quantity of Cup O' Soup packages consumed
This means that Cup O' Soup must be
good, and the income effect
the substitution effect.
On the following graph, use the blue line (circle symbol) to draw the student's demand for Cup O' Soup by plotting the optimum information from
points A and B.
4.00
3.50
Demand
3.00
2.50
2.00
1.50
1.00
合

Busnapshotld%3D21195098L
Problems & Applications (Ch 21)
Q Search th
A college student has two options for meals: eating at the dining hall for $6 per meal, or eating a package of Cup O' Soup for $2 per meal. Her weekly
food budget is $60.
Assume that she spends equal amounts on both goods.
On the following graph, use the green line (triangle symbol) to draw the college student's budget constraint. Then use the black point (plus symbol) to
indicate the initial optimum in this case.
50
45
Initial Budget Constraint
40
35
Initial Optimum (A)
30
25
20
New Budget Constraint
15
10
New Optimum (B)
W
hp
|耳a
Packages of Cup 0' Soup

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