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Unformatted text preview: x drops again to $0.50, the individual moves to BC 3 (slope = 0.5) and can now maximize his utility by consuming at C, with Qx 3 = 65. Figure 7.d.1 gives the quantities of X consumed as the price of X changes, holding other variables, such as P Y , Income, constant. Taking these pairs (P x , Q x ), we can derive the individuals demand curve for X. Figure 7.d.2 has the vertical axis showing the price of X and the same X-axis as Figure 7.d.1. From Fig.7.d.1, we can see that at P x = $2, 20 units of X is consumed, which is shown as point A on Fig.7.d.2. At P x = $1, Q x = 50, which is shown as point B. Point C shows that at P x = $0.5, Q x = 65. Connecting points A, B, and C, we get an approximation of the individuals demand curve showing the relationships between P x and Q x , ceteris paribus....
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- Spring '07