Price consumption curve

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1. An individual sets aside a certain amount of his income per month to spend on his two hobbies, collecting wine and collecting books. Given the information below, illustrate both the price consumption curve associated with changes in the price of wine, and the demand curve for wine.

Price Wine

Price Book

Quantity Wine

Quantity Book

Budget

$10

$10

7

8

$150

$12

$10

5

9

$150

$15

$10

4

9

$150

$20

$10

2

11

$150

2. An individual consumes two goods, clothing and food. Given the information below, illustrate the income consumption curve, and the Engel curves for clothing and food.

Price Clothing

Price Food

Quantity Clothing

Quantity Food

Income

$10

$2

6

20

$100

$10

$2

8

35

$150

$10

$2

11

45

$200

$10

$2

15

50

$250

Reference no: EM131068678

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