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John thinks that four 0.5kg bags of flour are exactly as good as one 2kg bag of flour. John has 84 euro to spend on
John thinks that four 0.5kg bags of flour are exactly as good as one 2kg bag of flour. John has 84 euro to spend on flour and he must pay 1.20 for a 0.5kg bag and 4 for a 2kg bag. (a) Draw John's budget line, his indifference curve map and determine his utility maximising consumption bundle. (b) Illustrate and explain how John's consumption bundle changes if the price of 0.5kg bags falls to 0.80.
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Managerial Economics A Problem-Solving Approach
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