his question concerns a person in an economy in which they only consumetwo commodities, coffee and cake. This person always consumes thesecommodities together in a fixed ratio; whenever they drink a cup of coffee, theyeat a single cake.This person has a budget of £99 to spend on coffee and cake. a. Price of coffee is £2 and the price of a cake is £1. ii. Price of coffee is £8 and the price of a cake is £1 iii. Price of coffee is £10 and the price of a cake is £1. b. Using the information from part a, draw an individual demand curve for coffee for this person. Briefly explain how you used the information frompart a to create the demand curve. c. Assume the price of coffee is £2 and the price of a cake is £1. This personnow decides to limit their consumption of coffee to one cup of coffee a dayand one cake a day. Discuss how this decision to limit their consumptioncontradicts the axioms of behaviour for consumption
This question concerns a person in an economy in which they only consumetwo commodities, coffee and cake. This person always consumes thesecommodities together in a fixed ratio; whenever they drink a cup of coffee, theyeat a single cake.This person has a budget of £99 to spend on coffee and cake.
a.
ii. Price of coffee is £8 and the price of a cake is £1
iii. Price of coffee is £10 and the price of a cake is £1.
b. Using the information from part a, draw an individual demand curve for coffee for this person. Briefly explain how you used the information frompart a to create the demand curve.
c. Assume the price of coffee is £2 and the price of a cake is £1. This personnow decides to limit their consumption of coffee to one cup of coffee a dayand one cake a day. Discuss how this decision to limit their consumptioncontradicts the axioms of behaviour for consumption
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