Given the preceding graph and knowing the price of an Americano is $4, Beth's available income for Americanos and danishes is $ Using the income amount you just computed, complete the following table by finding the price of a danish when BC₁ represents Beth's budget constraint and when BC₂ represents her budget constraint. Then indicate the quantity of danishes consumed in each of those scenarios. Price When Beth's budget constraint is... (Dollars per danish) BC₁ BC₂ Consumption (Danishes) Given the price-quantity combinations from the preceding table, use the blue line (circle symbol) to plot Beth's demand for danishes on the following graph. Hint: Assume that Beth's demand for danishes is a straight line. You should derive two points on the demand curve from the preceding graph. Then place the blue line on the following graph so that it passes through these two points.
Given the preceding graph and knowing the price of an Americano is $4, Beth's available income for Americanos and danishes is $ Using the income amount you just computed, complete the following table by finding the price of a danish when BC₁ represents Beth's budget constraint and when BC₂ represents her budget constraint. Then indicate the quantity of danishes consumed in each of those scenarios. Price When Beth's budget constraint is... (Dollars per danish) BC₁ BC₂ Consumption (Danishes) Given the price-quantity combinations from the preceding table, use the blue line (circle symbol) to plot Beth's demand for danishes on the following graph. Hint: Assume that Beth's demand for danishes is a straight line. You should derive two points on the demand curve from the preceding graph. Then place the blue line on the following graph so that it passes through these two points.
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section6.A: Indifference Curve Analysis
Problem 3SQP
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Transcribed Image Text:Given the price-quantity combinations from the preceding table, use the blue line (circle symbol) to plot Beth's demand for danishes on the following
graph.
Hint: Assume that Beth's demand for danishes is a straight line. You should derive two points on the demand curve from the preceding graph. Then
place the blue line on the following graph so that it passes through these two points.
?
PRICE (Dollars per danish)
10
9
8
w
2
1
0
0 2
4
6 8 10 12 14
QUANTITY (Danishes)
+
16
18 20
Demand
Transcribed Image Text:Beth recently moved to Dallas, where they developed a taste for drinking Americanos and eating danishes. Assume throughout this problem that the
price of an Americano is held constant at $4.
On the following graph, the purple curves (I₁ and I₂) describe two of Beth's indifference curves. The lines BC₁ and BC₂ represent two budget
constraints. Points X and Y show Beth's optimal consumption bundles subject to the budget constraints.
AMERICANOS
20
18
16
14
12
10
8
6
4
2
0
0
2
4
6
BC
+
8
I
10 12
DANISHES
14
BC
16
2
1
18 20
Given the preceding graph and knowing the price of an Americano is $4, Beth's available income for Americanos and danishes is $
(?)
Using the income amount you just computed, complete the following table by finding the price of a danish when BC₁ represents Beth's budget
constraint and when BC₂ represents her budget constraint. Then indicate the quantity of danishes consumed in each of those scenarios.
Price
When Beth's budget constraint is... (Dollars per danish)
BC₁
BC₂
Consumption
(Danishes)
Given the price-quantity combinations from the preceding table, use the blue line (circle symbol) to plot Beth's demand for danishes on the following
graph.
Hint: Assume that Beth's demand for danishes is a straight line. You should derive two points on the demand curve from the preceding graph. Then
place the blue line on the following graph so that it passes through these two points.
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