A consumer is choosing between magazines and books. His indifference curves and budget constraint are shown on the graph to the right. The utility-maximizing point is Suppose that the price of books falls. 1.) Use the line drawing tool to draw a new budget constraint (still tangent to one of the indifference curves). Label this line 'L² 2₁ 2.) Use the point drawing tool to locate the new utility-maximizing point. Label this point 'T' Carefully follow the instructions above, and only draw the required objects. Magazines 50- 45 40- 35- 30- 25- 20- 15- 10- 5-

A consumer is choosing between magazines and books. His indifference curves and budget constraint are shown on the graph to the right. The utility-maximizing point is Suppose that the price of books falls. 1.) Use the line drawing tool to draw a new budget constraint (still tangent to one of the indifference curves). Label this line 'L² 2₁ 2.) Use the point drawing tool to locate the new utility-maximizing point. Label this point 'T' Carefully follow the instructions above, and only draw the required objects. Magazines 50- 45 40- 35- 30- 25- 20- 15- 10- 5-

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.4P

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