Question 3: Samantha has $3,000 to spend on two goods: sandwiches and beer. The price of a sandwich is $6 and price of a beer is $5. a) Draw Samantha's budget line. Put beer on the horizontal axis. b) If Samantha's optimal consumption bundle contains 400 sandwiches, how many beer does her optimal consumption bundle contain? Show her optimal consumption in the graph above. c) Draw Samantha's indifference curve crossing her optimal consumption bundle. d) Now suppose the price of sandwiches increases to $10 per sandwich. Show the new budget line above. e) If Samantha's new optimal consumption bundle now contains 240 sandwiches, how many beer does her new optimal consumption bundle contain? Show her new optimal consumption in the graph above. f) Draw Samantha's new indifference curve crossing her new optimal consumption bundle.
Question 3: Samantha has $3,000 to spend on two goods: sandwiches and beer. The price of a sandwich is $6 and price of a beer is $5. a) Draw Samantha's budget line. Put beer on the horizontal axis. b) If Samantha's optimal consumption bundle contains 400 sandwiches, how many beer does her optimal consumption bundle contain? Show her optimal consumption in the graph above. c) Draw Samantha's indifference curve crossing her optimal consumption bundle. d) Now suppose the price of sandwiches increases to $10 per sandwich. Show the new budget line above. e) If Samantha's new optimal consumption bundle now contains 240 sandwiches, how many beer does her new optimal consumption bundle contain? Show her new optimal consumption in the graph above. f) Draw Samantha's new indifference curve crossing her new optimal consumption bundle.
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Theory Of Consumer Choice
Section: Chapter Questions
Problem 1PA
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