For Maahir, shampoo and conditioner are perfect complements. He likes to use 1 squirt of shampoo and
Question:
a. Draw a set of indifference curves for Maahir that illustrate the utility he derives from using shampoo and conditioner.
b. Assume that shampoo costs $4 and conditioner costs $2. Construct a budget constraint for Maahir and describe his purchasing habits. What is his optimal bundle likely to look like? (Hint: Assume some level of income for Maahir.)
c. Suppose that prices change so that shampoo costs $2 and conditioner costs $4. What is likely to happen to Maahir's optimal bundle as a result? Explain.
d. How would your answer to (c) change if Maahir used 2 squirts of shampoo and 1 squirt of conditioner each time he washed his hair?
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Step by Step Answer:
a b Maahirs budget constraint is 4S 2C 12 Since Maahir likes to consume the two goods shampoo and ...View the full answer
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Related Book For 
Microeconomics
ISBN: 978-1464187025
2nd edition
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson
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