Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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not use ai please
Transcribed Image Text:Siblings Ritvik and Roshan each have $50 to spend on Xbox games (X) and all other goods (Y). Games cost $25 each,
and all other goods (AOG) have a composite price of $1 each. A friend offers them a $25 Xbox gift card or $25 cash. a
. (10 pts) Ritvik loves to play Xbox and finds AOG to be useless. Using an indifference curve and budget line analysis,
show Ritviks optimal choice for each option (Xbox gift card and cash gift) as well as the initial choice. Which gift would
Ritvik prefer? Does your graph match your intuition? Explain.b. (10 pts) Roshan likes both gaming and AOG and will
choose to consume positive amounts of both goods. His preferences are convex, and he prefers AOG to gaming. Using a
separate graph from part (a), show Roshans optimal choice for each option (Xbox gift card and cash gift) as well as the
initial choice. Which gift would Roshan prefer? Does your graph match your intuition? Explain.
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