1. An individual sets aside a certain amount of her income per month to spend on her hobbies,

collecting wine and collecting books. Given the information below, draw a chart showing the

price-consumption curve associated with changes in the price of wine, and another chart

showing the demand curve for wine.

PRICE OF

WINE

10

12

15

20

PRICE OF

BOOK

10

10

10

10

QUANTITY OF

WINE

7

5

4

2

QUANTITY OF

BOOKS

BUDGET

8

9

9

11

Budget

150

150

150

150

2. An individual consumes two goods, clothing and food. Given the information below, draw

both the income-consumption curve and the Engel curve for clothing and food.

PRICE OPRICE OF

CLOTHiNG

10

10

10

10

Price of Food

2

2

2

2

Quantity of clothing

6

8

11

15

QUANTITY OF

FOOD

20

35

45

50

INCOME

$100

$150

$200

$250