Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Po, a kung fu panda, spends all his income on two goods: dumplings (d) and noodles (n). His income is $20. Assume that dumplings cost

Po, a kung fu panda, spends all his income on two goods: dumplings (d) and noodles (n). His income is $20. Assume that dumplings cost $1 and noodles costs $2 per unit.

(a)Draw Po's budget constraint. Place dumplings on thex-axis. Be sure to fully label your diagram.

(b)Assume that Po likes dumplings three times as much as noodles no matter how many noodles or dumplings he consumes. Draw two or three of his indifference curves on your diagram from part (a) and indicate Po's optimal consumption bundle. How many dumpling and noodles will he consume at this optimal bundle?

(c)Suppose the price of dumplings rises from $1 to $4 per unit. How will his optimal consumption bundle change? Show this on your diagram from part (a).

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Marketing

Authors: John McMurry, Robert Fay

13th Edition

125973806X, 9781259738067

More Books

Students also viewed these Economics questions

Question

6. How can a message directly influence the interpreter?

Answered: 1 week ago