Kyoko 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 $3. On the following graph, the purple curves (I, and I₂) describe two of Kyoko's indifference curves. The lines BC, and BC, represent two budget constraints. Points X and Y show Kyoko's optimal consumption bundles subject to the budget constraints. AMERICANOS 8 18 16 14 2 10 0 4 0 BC, 1 10 DANISHES 12 14 10 18 20 ? Given the preceding graph and knowing the price of an Americano is $3, Kyoko's available income for Americanos and danishes is
Kyoko 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 $3. On the following graph, the purple curves (I, and I₂) describe two of Kyoko's indifference curves. The lines BC, and BC, represent two budget constraints. Points X and Y show Kyoko's optimal consumption bundles subject to the budget constraints. AMERICANOS 8 18 16 14 2 10 0 4 0 BC, 1 10 DANISHES 12 14 10 18 20 ? Given the preceding graph and knowing the price of an Americano is $3, Kyoko's available income for Americanos and danishes is
Chapter3: Preferences And Utility
Section: Chapter Questions
Problem 3.2P
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Transcribed Image Text:Using the income amount you just computed, complete the following table by finding the price of a danish when BC, represents Kyoko's budget
constraint a
aint and when BCs represents her budget constraint. Then indicate the quantity of danishes consumed in each of those scenarios.
Price
When Kyoko's budget constraint is... (Dollars per danish)
BC₁
BC
Given the price-quantity combinations from the preceding table, use the blue line (circle symbol) to pilot Kyoko's demand for danishes on the following
graph.
Consumption
(Danishes)
Hint: Assume that Kyoko'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 da
10127 14 10 18
QUANTITY (Danishes)
Demand
D
Transcribed Image Text:Kyoko 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 $3.
On the following graph, the purple curves (I, and I₂) describe two of Kyoko's indifference curves. The lines BC and BC, represent two budget
constraints. Points X and Y show Kyoko's optimal consumption bundles subject to the budget constraints.
AMERICANOS
8
16
12
10
2
0
D
2
4
I
I
I
IBC
0
2 10 12
DANISHES
BC
10 18 20
Ⓒ
Given the preceding graph and knowing the price of an Americano is $3, Kyoko's available income for Americanos and danishes is S
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