Matt has $14 in income that he devotesentirely towards caffeine purchases,specifically coffee and tea. Tea costs $4/cupand coffee costs $5/cup. Also, tea is subjectto a quantity tax of $1/cup, and coffee issubject to a value tax of 0%.By how much will the slope of Matt's budgetconstraint change if his income were toincrease from $14 to $37?

In economics, a budget constraint represents all the combinations of goods and services that a…

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By how much will the slope of Matt's budget constraint change if his income were to increase from $14 to $37?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter10: Consumer Choice Theory

Section: Chapter Questions

Problem 8P

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Question

Matt has $14 in income that he devotes
entirely towards caffeine purchases,
specifically coffee and tea. Tea costs $4/cup
and coffee costs $5/cup. Also, tea is subject
to a quantity tax of $1/cup, and coffee is
subject to a value tax of 0%.
By how much will the slope of Matt's budget
constraint change if his income were to
increase from $14 to $37?

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