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Amy recently moved to Philadelphia, where they developed a taste for drinking Americanos and eating danishes. Assume throughout this problem that the price of an
Amy recently moved to Philadelphia, where they developed a taste for drinking Americanos and eating danishes. Assume throughout this problem that the price of an Americano is held constant at $4.On the following graph, the purple curves (I1and I2) describe two of Amy's indifference curves. The lines BC1and BC2represent two budget constraints. Points X and Y show Amy's optimal consumption bundles subject to the budget constraints.
20 18 16 14 12 X 10 AMERICANOS 8 6 4 2 BC BC. 0 0 2 4 6 8 10 12 14 16 18 20 DANISHES10 O 9 Demand 7 6 5 PRICE (Dollars per danish) 4 3 2 0 0 2 4 6 8 10 12 14 16 18 20 QUANTITY (Danishes)Step by Step Solution
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