A dry spell in Kenya reduced the water level at the Ndakaini Dam in Kenya by (75
Question:
A dry spell in Kenya reduced the water level at the Ndakaini Dam in Kenya by \(75 \%\) of its capacity in April 2017, resulting in water rationing in Nairobi and calls for the public to use water sparingly. A typical resident of Nairobi normally uses about 1.5 cubic meters of water per week. Suppose that, due to the dry spell, the government orders every resident to restrict their water use to 0.75 cubic meters per week. Use an indifference curve-budget line diagram, with water on the horizontal axis and all other goods on the vertical axis, to show how imposing such a restriction would affect the optimal bundle for a typical resident. If Mbaruku typically uses 0.75 cubic meters of water per week, would his optimal bundle be affected by the water restriction?
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