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# 5-3 - @2000.l RodgewsJ'S Sims Miriam reserved ECON215...

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Unformatted text preview: @2000 .l. RodgewsJ'S. Sims. Miriam: reserved ECON215 Assignment 5: B3 - ET’s Phone plan. Axes measure: y-axis = \$s of other goods. x-axis = “mins. of phone calls” ET’s budget line for plan '1 {orange line'i: Vertical intercpt is \$2500 Horizontal intercept = 2500:03 = 3333 mins. ET’s budget line for plan 2 {blue line}: 1Vertical intercept is at 5(2500-100), = \$ 2400. then horizontal to 1000. then domr-rard sloping to intercept the x-axis at 10000 mins. If] "l_'_'| D D VJ; [— I11 J: 4.: D u. D H} {b} It is possible for ET. to prefer Plan ‘1 over Plan 2 if his utility-maximizing combination is Ella” 3 less than 333 minutes. Plan 1 For example, see the very ”flat“ ID on the diagram which is tangent to Plan 1 at point E at about 120 minutes. 33-3 “3":"3' minutes of phone calls 83.33 loam} ...
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