Order the answer to: Max chooses between water and all other goods. If he

Academic Help business-economics Order the answer to: Max chooses between water and all other goods. If he

business-economics

Order the answer to: Max chooses between water and all other goods. If he

Question Max chooses between water and all other goods. If he spends all his money on water, he can buy 12,000 gallons per week. At current prices, his optimal bundle is e1. Show in a diagram. During a drought, the government limits the number of gallons per week that he may purchase to 10,000. Using diagrams, discuss under which conditions his new optimal bundle, e2, will be the same as e1. If the two bundles differ, can you state where e2 must be located?
Subject business-economics
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