1. A consumer has an income of Php 3,000.00 per periad. He spends it an faad and clothing, with prices at Php 150.00 per unit and Php100.00 per unit, respectively. a. Draw the consumer's budget line, placing faad on the Y axis and clothing on the X axis. Label it as BL1. b. Suppose the price of faad doubles, show what happens to the budget line. Using the same graph in letter a, sketch the new budget line and label it as BL2. c. Starting from the initial income and price levels, suppose the consumer's income falls by 20%, draw the new budget line in the same graph used in a and b and label it as BL3. C.
1. A consumer has an income of Php 3,000.00 per periad. He spends it an faad and clothing, with prices at Php 150.00 per unit and Php100.00 per unit, respectively. a. Draw the consumer's budget line, placing faad on the Y axis and clothing on the X axis. Label it as BL1. b. Suppose the price of faad doubles, show what happens to the budget line. Using the same graph in letter a, sketch the new budget line and label it as BL2. c. Starting from the initial income and price levels, suppose the consumer's income falls by 20%, draw the new budget line in the same graph used in a and b and label it as BL3. C.
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Theory Of Consumer Choice
Section: Chapter Questions
Problem 11PA
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