Business, 16.11.2019 06:31 brianamarialove15

Maude spends all of her income on delphiniums and hollyhocks. she thinks that delphiniums and hollyhocks are perfect substitutes; one delphinium is just as good as one hollyhock. delphiniums cost $4 a unit and hollyhocks cost s5 a unit. hrs1+ 1 a. if the price of delphiniums decreases to $3 a unit, will maude buy more of them? yes. what part of ne change in consumption is due to the income etfect and what part is due to the substitution effect? of delphiniums and hollyhocks are respectively ps $4 and p $5 and if maude has $120 hat she can attain in red to spend, draw her budget line in blue ink. draw the highest indifference curve t ink, and label the point that she chooses as a. c. now let the price of hollyhocks fall to $3 a unit, while the price of delphiniums does not change. draw her new budget line in black ink. draw the highest indifference curve that she can now reach with red ink. label the point she chooses now as b. d. how much would maude's income have to be after the price of hollyhocks fell, so that she could just exactly afford her old commodity bundle a? e. when the price of hollyhocks fell to $3, what part of the change in maude's demand was due to the income effect and what part was due to the substitution effect?

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Maude spends all of her income on delphiniums and hollyhocks. she thinks that delphiniums and hollyh...