Consider the following diagram, which depicts various combinations of two goods: grits and shins. Leon is currently

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Consider the following diagram, which depicts various combinations of two goods: grits and shins. Leon is currently maximizing his utility at point A in the diagram.

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a. Suddenly, the price of shins decreases by half. Redraw the diagram and show how the change in the price of shins alters Leon?s budget constraint.

b. Suppose that grits and shins are complements. Add an indifference curve to the diagram that shows Leon?s new utility-maximizing bundle of grits and shins.?

c. Redraw part (b), but this time assume that grits and shins are substitutes.

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Related Book For  answer-question

Microeconomics

ISBN: 9781319105563

3rd Edition

Authors: Austan Goolsbee, Steven Levitt, Chad Syverson

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