Question
Indifference Curve and Budget Line : Annie has an income of $160 an hour. Popcorn costs $5 a bag, and costs $4 a six-pack of
Indifference Curve and Budget Line : Annie has an income of $160 an hour. Popcorn costs $5 a bag, and costs $4 a six-pack of energy drink
a. Draw a graph of Annie's budget line with six-pack of energy drink on the x-axis, and popcorn on the y-axis.
b. What is the slope of Annie's budget line (2%)? What could this slope be also called?
c. If we know that Annie maximizes her utility with the purchase of 20 bags of popcorn, how many six-pack energy drink she will purchase?
(an estimate from your graph & actual calculation), draw an indifference curve reflecting this optimum.
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