Situation on graph using budget lines-indifference curves

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Reference no: EM13889023

Please answer all the questions.

Jonathan consumes two goods, steak and instant ramen noodles. When Jonathan has less than $100, instant ramen noodles are a normal good. However, when Jonathan has more than $100, instant ramen noodles are an inferior good.

a) Show the situation on a graph using budget lines and indifference curves.

b) Derive Jonathan’s Engel curve for instant ramen noodles.

c) If the price of instant ramen noodles increases, show the income and substitution effects on a graph.

Reference no: EM13889023

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