5. Susan commutes to work. She can either use public transport or her own car. Her indifference curves obey the four properties of indifference curves for ordinary goods. a. Draw Susan’s budget line with car travel on the vertical axis and public transport on the horizontal axis. Suppose that Susan consumes some of both goods. Draw an indifference curve that helps you illustrate her optimal consumption bundle. b. Now the price of public transport falls. Draw Susan’ new budget line? c. For Susan, public transport is an inferior, but not a Giffen, good. Draw an indifference curve that illustrates her optimal consumption bundle after the price of public transport has

Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter20: Consumer Choice And Elasticity
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5. Susan commutes to work. She can either use public transport or her own car. Her indifference curves obey the four properties of indifference curves for ordinary goods. a. Draw Susan’s budget line with car travel on the vertical axis and public transport on the horizontal axis. Suppose that Susan consumes some of both goods. Draw an indifference curve that helps you illustrate her optimal consumption bundle. b. Now the price of public transport falls. Draw Susan’ new budget line? c. For Susan, public transport is an inferior, but not a Giffen, good. Draw an indifference curve that illustrates her optimal consumption bundle after the price of public transport has

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