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I only need help with the questions I haven't answered yet. Help - X C Problem 11.5. Har X Mathway | Algebra X Ow49AYIz/eco-11-pdf?pg=3 V
I only need help with the questions I haven't answered yet.
Help - X C Problem 11.5. Har X Mathway | Algebra X Ow49AYIz/eco-11-pdf?pg=3 V Sign Problem 11.5. Harry's budget for hot dogs and chicken sandwiches each week is shown with budget line A in the figures below. Harry's initial consumption is at point r on indifference curve JA. Dogs Dog Chick-6-16 Chick-Al. le (a) If hot dogs cost $3 and chicken sandwiches cost $2, what is Harry's budget? |$ 18 At his initial consumption point he spends $ 8.50 on chicken sandwiches and $ 10.50 on hotdogs per week. (b) The price of chicken sandwiches changes so that the new budget line is shown in B. What is the new price of chicken sandwiches? $4 (c) After the price change Harry's consumption shifts to indifference curve I" and he consumes at point B. At his new consumption point he spends $ 6 on chicken sandwiches and $ 12 on hotdogs. (d) On the left figure, decompose Harry's change in consumption into the portion due to the change in relative prices (substitution effect) and the loss of purhasing power (income effect). Illustrate the decomposition on the graph and show each component on the x-axis. (c) Based on your graphical analysis, the change in chicken consumption due to the substitution effect is and due to the income effect is Indicate + /- for whether the effects are positive or negative. (f) Harry is considering working additional hours so that he can eat.more chicken sandwiches and hot dogs. Illustrate on the right hand graph the amount of extra income needed to make him just as happy as he was before the price increase. (g) How much extra income must Harry carn to make him just as happy with lunch as he was before the price change? $ How many chicken sandwiches and hot dogs would he consume with this higher income? chicken and hot dogs MacBook Air 988 DII DD F4 F6 F7 FB FO % & 4 5 6 7 8 9Step by Step Solution
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