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a2q2 - 2 Massimo quits his job BUR‘HLTDS Him-KI Lﬂbu...

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Unformatted text preview: ( 2. Massimo quits his job BUR‘HLTDS Him-KI Lﬂbu- HMS”- {I-‘liliatE-oiia‘i‘iu Hmsunoens Massimo burs either burritos or hamburgers with his Iu nch money. For Massimo. hamburgers and burritos are both normal goods at all price and income levels. In the graph above, the blue curve {labeled U2} and the purple cun-re [labeled U1} are two of Massimo's utilitiir curves. The orange line {iabeied 51 i is Massimo’s budget line at his original Income of \$90. Massimo decides to quit his job and start his own business. For the ﬁrst year of his new business, he will have a lower income of \$5D. The green line {labeled SE} is Massimo's budget line after he starts his own business. The red points [cross symbols labeled E and F j are the tangents-g points of the utiiit'icr curves and budget lines graphed. @ a. In the graph below, the blue curve {labeled D1) is Hassle-He’s demand for hamburgers at his original Income. After Massimo starts his own business (and therefore decreases his income}, where will his new demand curve for hamburgers lie relative to his original demand curve, Di? The new demand curve wlil lie to the left of D1. if “i Using the information given above, determine one point on Massimo's demand curve after his income decreases. Use the purple point {diamond symbol} to pint a point on Hasslmo's new demand cu rue for hamburgers. PRFEE lﬂoiiarsl Bl'nphs lll-L'll 1 '5” LE? ﬁﬂz-EDH hplhi Inc. All r-ghi'r. I maul and. ...
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