a. Draw a budget line for Lynne, who has a weekly income of $225. Assume that she

Question:

a. Draw a budget line for Lynne, who has a weekly income of $225. Assume that she buys food and clothes, and that food costs $15 per bag while clothes cost $25 per item. Add an indifference curve for Lynne that is tangent to her budget line at the combination of 3 items of clothing and 10 bags of food.

b. Draw a new indifference curve for Lynne, showing what will happen if her tastes change, so that she gets more satisfaction from an extra item of clothing, and less satisfaction from an extra bag of food.

c. Returning to the original tangency, what will happen if Lynne decides to join a nudist colony?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Macroeconomics Principles and Applications

ISBN: 978-1133265238

5th edition

Authors: Robert e. hall, marc Lieberman

Question Posted: