. John has a paper route and spends all his weekly allowance on hamburgers and pop. The price of a hamburger is $2 and the price of a pop is $1. every week John buys 20 hamburgers and 10 pop. If the price of a hamburger rises to $4 (because of a ban on beef imports) and the price of a pop falls to 50 cents. Draw indifference curves to answer the following:
a)
To answer part (a) of the question, we need to draw indifference curves to analyze John's preferences with different combinations of hamburgers and pops.
An indifference curve represents a combination of goods that give a person the same level of utility or satisfaction. In this case, we are interested in John's preferences between hamburgers and pops.
First, let's define a couple of points on the indifference curve:
- At point A, John buys 20 hamburgers and 10 pops when the price of a hamburger is $2 and the price of a pop is $1.
- At point B, John buys 20 hamburgers and 10 pops when the price of a hamburger is $4 and the price of a pop is $0.50.
Now, let's plot these points on a graph. Assume that the horizontal axis represents the quantity of hamburgers and the vertical axis represents the quantity of pops.
Point A: (20 hamburgers, 10 pops)
Point B: (20 hamburgers, 10 pops)
Now, draw a curve passing through these two points. This curve represents John's indifference between hamburgers and pops, meaning he is equally satisfied with both combinations.
It's important to note that the shape of the indifference curve can vary depending on a person's preferences. Some people may prefer more hamburgers, while others may prefer more pops. In this case, we assume that John has no preference between hamburgers and pops.
Now, you can analyze different points on the indifference curve to answer various questions about John's preferences.