A consumer has an annual budget constraint for two goods: “housing sq. ft." and "$ for everything else". Draw the budget constraint for this consumer if income (v) = $50,000 and price per sq. ft. of housing, ph, is S200. Please be sure to fully label your graph (i.e., slope, intercept, etc.). Note: plot "housing sq. ft." on the x-axis. How would this consumer's budget line change if she received a $5,000 raise and the price of housing increased to $250? Include a graph with your answer. How did the economic rate of substitution (ERS) between housing and $ for everything else change when ph changed? Please interpret the ERS both before and after the price change.
A consumer has an annual budget constraint for two goods: “housing sq. ft." and "$ for everything else". Draw the budget constraint for this consumer if income (v) = $50,000 and price per sq. ft. of housing, ph, is S200. Please be sure to fully label your graph (i.e., slope, intercept, etc.). Note: plot "housing sq. ft." on the x-axis. How would this consumer's budget line change if she received a $5,000 raise and the price of housing increased to $250? Include a graph with your answer. How did the economic rate of substitution (ERS) between housing and $ for everything else change when ph changed? Please interpret the ERS both before and after the price change.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![A consumer has an annual budget constraint for two goods: “housing sq. ft." and "$ for everything
else".
Draw the budget constraint for this consumer if income (v) = $50,000 and price per sq. ft. of
housing, ph, is S200. Please be sure to fully label your graph (i.e., slope, intercept, etc.).
Note: plot "housing sq. ft." on the x-axis.
How would this consumer's budget line change if she received a $5,000 raise and the price of
housing increased to $250? Include a graph with your answer.
How did the economic rate of substitution (ERS) between housing and $ for everything else
change when pa changed? Please interpret the ERS both before and after the price change.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd920f800-7cb4-4708-a86f-fdc64006663e%2Fb5965de2-7e1c-4079-9d5c-5f55d4a20747%2Fss0hmnv_processed.png&w=3840&q=75)
Transcribed Image Text:A consumer has an annual budget constraint for two goods: “housing sq. ft." and "$ for everything
else".
Draw the budget constraint for this consumer if income (v) = $50,000 and price per sq. ft. of
housing, ph, is S200. Please be sure to fully label your graph (i.e., slope, intercept, etc.).
Note: plot "housing sq. ft." on the x-axis.
How would this consumer's budget line change if she received a $5,000 raise and the price of
housing increased to $250? Include a graph with your answer.
How did the economic rate of substitution (ERS) between housing and $ for everything else
change when pa changed? Please interpret the ERS both before and after the price change.
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