Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 2 - Part I - Thinking Like an Economist - Questions for Review: 6

Answer

Diagram:
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Work Step by Step

The blue line represents the initial economy. Begin by plotting how much milk they can buy if they put all their money in milk, and how much cookies they can buy by putting all their money in cookies. A consumer can then operate at any point along the blue line. The orange line shows what happens after the cows are killed. This reduces the amount of milk available, pivoting the line to the left.
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