Unformatted text preview: Suppose she is promoted and her income increases to $200. Draw her new budget
line and indifference curve. Using graph show where she maximizes her utility.
Solve her utility maximizing bundle (F, H) given her new budget constraint.
Her new budget constraint is blue line; her utility maximizing bundle given budget constraint is
c. Using graphs from (a) & (b), draw the Income-Consumption Curve (ICC) on
Green dashed line
d. Using ICC above, draw the Engel curve (y-axis: Income($/wk), x-axis:
0 2 4 6 8 10 Engel Curve is purple dash line
2. Draw the Engel Curve for an inferior good.
Y 12 14 House...
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- Spring '14
- Utility, red line, Engel Curve, utility maximizing bundle