What happened to the quantity of cups o soup consumed

Reference no: EM13236353

A college student has 2 options for meals: eating at the dining hall for $6 per meal, or eating a Cup O' Soup for $1.50 per meal. His weekly food budget is $60.

a. Draw the budget constrain showing the trade-off between dining hall meals and Cups O' Soup. Assuming that he spend equal amounts on both goods, draw an indifference curve showing the optimum choice. Label the optimum as point A.

b. Suppose the price of a Cup O' Soup now rises to $2. Using the diagram from part (a), show the consequences of this change in price. Assume that our student now spend only 30 percent of his income on dining hall meals. Label the new optimum as point B.

c. What happened to the quantity of Cups O' Soup consumed as a result of this price change? What does this result say about the income and substitutions effects? Explain.

d. Use points A and B to draw a demand curve for Cup O' Soup. What is this type of good called?

Reference no: EM13236353

Questions Cloud

State step in an electrophilic aromatic bromination reaction : Why is the first step in an electrophilic aromatic bromination reaction so much more endothermic than the first step in an electrophilic addition to an alkene

Example of a literary work-black slaves : example of a literary work or a work of visual art from the 1800 - either Romantic or Realist in style that responds in some way to the Industrial Revolution. Identify the work and the artist or writer, describe its features and style, and explain th..

Explain should the airline carry freight for the local firm : The estimated cost per flight is $2,000. It expects to fly full flights (100 passengers), so marginal cost (on a per passenger basis) is $20.. The airline's estimated demand curve is P = 120 - 0.1Q,

Explain carboxylic acid functions in 3-nitrophthalic acid : There are two carboxylic acid functions in 3-nitrophthalic acid. The pKa of the acid function is at the 2-position is approximately 2, whereas that at the 1- position is about 3. Which of the two is the more acidic and why

What happened to the quantity of cups o soup consumed : Suppose the price of a Cup O' Soup now rises to $2. Using the diagram from part (a), show the consequences of this change in price. Assume that our student now spend only 30 percent of his income on dining hall meals.

Realm of incredible economic contrasts : South Asia is a realm of incredible economic (as well as social and political) contrasts. What are some areas where the regional economy is either thriving or in need of further development and why?

State intercept points with axes and critical kink points : Suppose that there is a consumer who consumes 2 types of goods: Good A and Good B. The consumer has $84 and the price per unit of Good A is $4 and the price per unit of Good B is $7.

Loss estimates regarding an investment project : What is the likelihood that each alternative will produce a profit of at least $ 300 - Which size of equipment would you recommend on the basis of the three coefficients of variation that you calculated?

The apparent motivation for the assassination of gandhi : The apparent motivation for the assassination of Gandhi was that Gandhi

User Account

All Pages