a. Draw a budget line for Lynne, who has a weekly income of $225. Assume that she
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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?
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Related Book For
Macroeconomics Principles and Applications
ISBN: 978-1133265238
5th edition
Authors: Robert e. hall, marc Lieberman
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