A consumer earns 40 dollars of income which can be saved or spent. The graph below shows the consumer's budget constraint if the consumer could save money in a bank account, earning zero interest. 60 55 50 45 40 35 30 25 20 15 10 0 10 20 60 40 30 50 Current Consumption 14. On the graph, draw an indifference curve showing the consumer choosing to save $10 for future consumption. 15. On the graph, include a new budget line showing how the budget constraint changes for the consumer if the consumer could earn 25% on any savings. Future Consumption 5 0
A consumer earns 40 dollars of income which can be saved or spent. The graph below shows the consumer's budget constraint if the consumer could save money in a bank account, earning zero interest. 60 55 50 45 40 35 30 25 20 15 10 0 10 20 60 40 30 50 Current Consumption 14. On the graph, draw an indifference curve showing the consumer choosing to save $10 for future consumption. 15. On the graph, include a new budget line showing how the budget constraint changes for the consumer if the consumer could earn 25% on any savings. Future Consumption 5 0
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter20: Consumer Choice And Elasticity
Section: Chapter Questions
Problem 4CQ
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Transcribed Image Text:A consumer earns 40 dollars of income which can be saved or spent. The graph below shows the consumer's
budget constraint if the consumer could save money in a bank account, earning zero interest.
60
55
50
45
40
35
30
25
20
15
10
5
0
0
10
20
30
40
60
50
Current Consumption
14. On the graph, draw an indifference curve showing the consumer choosing to save $10 for future consumption.
15. On the graph, include a new budget line showing how the budget constraint changes for the consumer if the
consumer could earn 25% on any savings.
Future Consumption
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