2. James is an undergraduate student who has £800 of income to spend each semester on pizza and books. The price of a pizza is £8 and the price of a book is £4O. a)ln a diagram with pizza on the vertical axis and books on the horizontal axis, draw James's budget constraint. b)Now suppose James's parents buy him a £400 gift voucher each semester that can only be used to buy books. In the same diagram for part (a), draw James's budget constraint when he has the gift voucher in addition to his £800 income. c)ls James better-off with the gift voucher? Explain your answer.

2. James is an undergraduate student who has £800 of income to spend each semester on pizza and books. The price of a pizza is £8 and the price of a book is £4O. a)ln a diagram with pizza on the vertical axis and books on the horizontal axis, draw James's budget constraint. b)Now suppose James's parents buy him a £400 gift voucher each semester that can only be used to buy books. In the same diagram for part (a), draw James's budget constraint when he has the gift voucher in addition to his £800 income. c)ls James better-off with the gift voucher? Explain your answer.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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