Joe buys more clothes than Jim. a. Using indifference curves, show how Jims consumption of clothing and
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Joe buys more clothes than Jim.
a. Using indifference curves, show how Jim’s consumption of clothing and food may differ from Joe’s because they have different tastes, ceteris paribus.
b. Suppose that Jim and Joe have the same tastes and income. Joe’s father manages a clothing store, and Joe is able to buy all his clothes at wholesale prices. Show why Jim’s choices of food and clothing differ from Joe’s in this situation.
c. Now suppose that Jim and Joe have the same tastes and face the same prices, but that Joe has more money to spend than Jim. Demonstrate how this difference affects Joe’s consumption pattern compared with Jim’s.
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a Joe has greater preferences for clothi...View the full answer
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