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Ronald spends his money on ramen noodles and Gatorade. Suppose his indifference curves have all of the properties of ord...

Ronald spends his money on ramen noodles and Gatorade. Suppose his indifference curves have all of the properties of ordinary goods. Also suppose that Gatorade is a normal good and ramen is an inferior good. Gatorade costs $2 per bottle and ramen costs $2 per pack. Ronald has $20 to spend. Draw a diagram of Ronald’s budget line placing ramen on the horizontal axis and Gatorade on the vertical axis. Suppose his optimal consumption bundle is 3 packs of ramen and 6 bottles of Gatorade. Illustrate that bundle and draw the representative indifference curve on which this bundle lies.

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Answer #1

Ronalt ha 20 to sped auy his optimal Cnumplion lounolle is 3 2 pea pack) ang & bottler f Gatorade (ceet 42 Ramon CCoet Per bo

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