This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
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 individual’s 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 individual’s demand curve showing the relationships between P x and Q x , ceteris paribus....
View Full Document
- Spring '07
- $1, $0.50, $0.5