Nicanor's passion is good wine. If the prices of the other goods are constant, Nicanor's demand for a good Rioja is c = 0.04m – 2p where m is his income, p is the price of Rioja and c is the demand for Rioja bottles. Assume that Nicanor has an income of $10,000 and that the price of a decent bottle of Rioja is $50. If the price of Rioja rises to $60, determine the income effect and the substitution effect on the demand for bottles of Nicanor wine.

quantity of bread 100 90 80 70 60 50 40 30 20 10 B 10 20 30 40 50 60 7080 quantity of apples Juan is a consumer of apples and bread. Juan shifts his consumption bundle from point B to point A. Which of the following is true? Juan's demand curve for apples shifted left and demand curve for bread shifted right. Juan's demand curve for both apples and bread shifted right. Juan's demand curve for apples shifted left and demand curve for bread shifted left. Juan's demand curve for apples shifted right and demand curve for bread shifted left.

Based on Nick's willingness to sell, plot his supply curve as a step function on the following graph using the orange points (square symbol). Be sure to plot your first point at (0, 0). Price of Water 10 9 100 8 7 8 10 3 2 1 0 0 2 3 Quantity of Water Suppose the price of a bottle of water is $4. In this case, Nick receives $ 5 If the price rises to $6, Nick now sells Nick's Supply Price = $4 Use the black line (plus symbol) to draw a price line at $4. Next use the grey point (star symbol) to indicate how many bottles of water Nick will produce and sell at that price. Finally, use the purple point (diamond symbol) to shade the area that represents Nick's producer surplus. bottles of water. This Quantity Sold Producer Surplus in producer surplus from his water sales. his producer surplus to $

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