Question

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 curve for wine.

in the price of wine and the demand

Price Wine 10.00 12.00 15.00 20.00

Price Book 10.00 10.00 10.00 10.00

Quantity Wine 7.00 5.00 4.00 2.00

Quantity Book 8.00 9.00 9.00 11.00

Budget 150.00 150.00 150.00 150.00

2. An individual consumes two goods, clothing and
illustrate both the income-consumption curve and the Engel curve for clothing and food.

Price Clothing 10.00 10.00 10.00 10.00

Price Food 2.00 2.00 2.00 2.00

Quantity Clothing 6.00 8.00 11.00 15.00

Quantity Food 20.00 35.00 45.00 50.00

Budget 100.00 150.00 200.00 250.00

food. Given the information below,

3. a. Orange juice and apple juice are known to be perfect substitutes. Draw the appropri- ate priceconsumption curve (for a variable price of orange juice) and income-consumption curve. b. Left shoes and right shoes are perfect complements. Draw the appropriate price- consumption and income-consumption curves.

Answer 1

1. Price consumption Curve: The Price consumption Curve (PCC) is drawn on the on the locus of points where each point shows the combintaion of quantities of two goods that a consumer will purchase. This joins several Price Effects. The Table below shows the tabular representation of the situtaion described based on which we will draw the associated Price Consumption Curves.

WINE (Price)	BOOKS (Price)	QUANTITY (WINE)	QUATITY (BOOKS)	BUDGET
10	10	7	8	150
12	10	5	9	150
15	10	4	9	150
20	10	2	11	150