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2/3/2021

EPPD1013 MICROECONOMICS 1 SET 2| 1/20202021-Choo Wei Sheng

Student: Choo Wei Sheng Instructor: Riayati Ahmad Date: 2/3/21

Course: EPPD1013 MICROECONOMICS 1 SET 2| 1/20202021 Book: Perloff: Microeconomics, 8e, Global Edition Time: 7:45 PM

Hugo views donuts and coffee as perfect complements: He always eats one donut with a cup of coffee and will not eat a donut without coffee or drink coffee without a donut, as illustrated in the figure to the right. Derive and plot Hugo's Engel curve for donuts.

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Assume the price of donuts, pD , is $1.50 and the price of

According to the figure, when Hugo consumes 1 donut, his income is $ 4.50 . (Enter a numeric response using an integer.) Similarly, when Hugo consumes 2 donuts, his income equals $ 9.00 .

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coffee, pC , is $3.00 .

Engel curve

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Finally, when Hugo consumes 3 donuts, his income equals $13.50, from 3 donuts times $1.50 plus 3 cups of coffee times $3.00 .

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Donuts

Hugo's Engel curve, which shows the relationship between the quantity demanded of a single good and income holding prices constant, is illustrated in the figure to the right. Because donuts and coffee are perfect complements, Hugo's income must rise by pD plus pC for him to buy another donut. YOU ANSWERED: 1 1

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