Question

please be quick

NSA 75BC-45DAY. 1994 # 2 of 2 OS Ted enjoys eating both apples (A) and Peaches (P). He has $30 to spend on the two goods each week. Initially. apples cost $2 per pound and peaches cost $3 per pound Suppose the price of peaches falls to $2. Using the information from the table illustrate Tod's bedoeline, the new budget line, his 3 bundles (bundles A, B, and C), and two indifference curve sure to label everything properly. Be Apples Peaches Apples 7.5 Initial U-Max (bundle A) Decomposition (bundle B) Final U-Max (bundle C) 6.5 Your answer Substitution Fffect Income Effect Peaches and apples are: Peaches are an)_good Peaches b. Based on your drawing, how much of the net change in peach consumption (from bundle A to bundle ) does the substitution account for? How much of the net change in peach consumption is due to the income effect? Summarize these findings in the table above c. Does Ted view peaches and apples as complements, substitutes or unrelated? Note your answer in the third row of the table. . Are peaches normal, inferior, or income inelastic (not related to income)? Note your answer in the fourth row of the table. reply believe the walls affected pa p er poc consumption Rull by pounds to the substitution lect, write " byl pound, wie in if you believe

Answer 1

Apple Cost = $2 plaches cost-$3 | و ینا Ah B is substitution et effect 6.5 & locis Income effect Peaches Peaches & apples are gross complement peaches are crncome inelastic Peaches from 5 too is substitution Effect income effect to peaches & Apples are complement home closhiety This neome for peaches =0 Inelasti