1. Suppose a consumer has a monthly income of m = 100 which she spends on two commodities: french fries (x1) and beef jerky (r2). The price of french fries is p1 = 2 and the price of beef jerky is p2 = 5. (a) Write down the consumer's budget constraint (equation). (b) What is the maximal consumption of french fries (this is called the real income in french fries). (c) Find the maximal consumption of beef jerky (real income in terms of beef jerky). (d) Using a graph, plot the budget constraint and identify the quantities (found above) where the budget constraint inter- sects each of the axes.
1. Suppose a consumer has a monthly income of m = 100 which she spends on two commodities: french fries (x1) and beef jerky (r2). The price of french fries is p1 = 2 and the price of beef jerky is p2 = 5. (a) Write down the consumer's budget constraint (equation). (b) What is the maximal consumption of french fries (this is called the real income in french fries). (c) Find the maximal consumption of beef jerky (real income in terms of beef jerky). (d) Using a graph, plot the budget constraint and identify the quantities (found above) where the budget constraint inter- sects each of the axes.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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just answer b,c,d
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