AMERICANOS 10. Deriving demand from an indifference map Ginny recently moved to Philadelphia, 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 (I, and I) describe two of Ginny's Indimtarence curves. The lines BC, and BC, represent two budget constraints. Points X and Y show Ginny's optimal consumption bundles subject to the budget constraints. B 10 DANISHES 12 14 BC 18 20 (?) Given the preceding graph and knowing the price of an Americano is $4, Ginny's available income for Americanos and danishas is PRICE (Dollars per danish) Using the income amount you just computed, complete the following table by finding the price of a danish when BC represents Ginny's budget constraint and when BC; represents her budget constraint. Then indicate the quantity of danishes consumed in each of those scenarios. Price When Ginny's budget constraint is... (Dollars per danish) BC BC: Consumption (Danishes) Given the price-quantity combinations from the preceding table, use the blue ane (circle symbol) to plot Ginny's demand for danishes on the following graph. Hint: Assume that Ginny's demand for danishes is a straight line. You should derive two points on the demand curve from the preceding graph. Than place the blue line on the following graph so that it passes through these two points. 10 B 4 10 12 14 14 QUANTITY (Danishes) Demand ?
AMERICANOS 10. Deriving demand from an indifference map Ginny recently moved to Philadelphia, 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 (I, and I) describe two of Ginny's Indimtarence curves. The lines BC, and BC, represent two budget constraints. Points X and Y show Ginny's optimal consumption bundles subject to the budget constraints. B 10 DANISHES 12 14 BC 18 20 (?) Given the preceding graph and knowing the price of an Americano is $4, Ginny's available income for Americanos and danishas is PRICE (Dollars per danish) Using the income amount you just computed, complete the following table by finding the price of a danish when BC represents Ginny's budget constraint and when BC; represents her budget constraint. Then indicate the quantity of danishes consumed in each of those scenarios. Price When Ginny's budget constraint is... (Dollars per danish) BC BC: Consumption (Danishes) Given the price-quantity combinations from the preceding table, use the blue ane (circle symbol) to plot Ginny's demand for danishes on the following graph. Hint: Assume that Ginny's demand for danishes is a straight line. You should derive two points on the demand curve from the preceding graph. Than place the blue line on the following graph so that it passes through these two points. 10 B 4 10 12 14 14 QUANTITY (Danishes) Demand ?
Chapter4: Utility Maximization And Choice
Section: Chapter Questions
Problem 4.5P
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Transcribed Image Text:AMERICANOS
10. Deriving demand from an indifference map
Ginny recently moved to Philadelphia, 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 (I, and I) describe two of Ginny's Indimtarence curves. The lines BC, and BC, represent two budget
constraints. Points X and Y show Ginny's optimal consumption bundles subject to the budget constraints.
B
10
DANISHES
12
14
BC
18 20
(?)
Given the preceding graph and knowing the price of an Americano is $4, Ginny's available income for Americanos and danishas is
Transcribed Image Text:PRICE (Dollars per danish)
Using the income amount you just computed, complete the following table by finding the price of a danish when BC represents Ginny's budget
constraint and when BC; represents her budget constraint. Then indicate the quantity of danishes consumed in each of those scenarios.
Price
When Ginny's budget constraint is... (Dollars per danish)
BC
BC:
Consumption
(Danishes)
Given the price-quantity combinations from the preceding table, use the blue ane (circle symbol) to plot Ginny's demand for danishes on the following
graph.
Hint: Assume that Ginny's demand for danishes is a straight line. You should derive two points on the demand curve from the preceding graph. Than
place the blue line on the following graph so that it passes through these two points.
10
B
4
10
12
14
14
QUANTITY (Danishes)
Demand
?
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