Latasha is in a band and likes to advertise upcoming shows using flyers she posts around the city. Making one black-and-white flyer costs $0.05, and making a flyer in color costs $0.10. Latasha budgets $25.00 for making flyers each month. The following graph shows three of Latasha's indifference curves for the number of black-and-white and color flyers that she makes. Use the green line (triangle symbol) to plot Latasha's budget constraint. Then, place the black point (plus symbol) on the graph to indicate Latasha's optimal consumption choice given that budget constraint. WHITE FLYERS 1000 900 800 700 600 500 Budget Constraint Optimum ?

Latasha is in a band and likes to advertise upcoming shows using flyers she posts around the city. Making one black-and-white flyer costs $0.05, and making a flyer in color costs $0.10. Latasha budgets $25.00 for making flyers each month. The following graph shows three of Latasha's indifference curves for the number of black-and-white and color flyers that she makes. Use the green line (triangle symbol) to plot Latasha's budget constraint. Then, place the black point (plus symbol) on the graph to indicate Latasha's optimal consumption choice given that budget constraint. WHITE FLYERS 1000 900 800 700 600 500 Budget Constraint Optimum ?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Revealed Preferences and Budget Constraint Analysis

Revealed means “Let Out,” and Preference means “Choice”; Choice Reveals Preference.

Question

Latasha is in a band and likes to advertise upcoming shows using flyers she posts around the city. Making one black-and-white flyer costs $0.05, and
making a flyer in color costs $0.10. Latasha budgets $25.00 for making flyers each month.
The following graph shows three of Latasha's indifference curves for the number of black-and-white and color flyers that she makes.
Use the green line (triangle symbol) to plot Latasha's budget constraint. Then, place the black point (plus symbol) on the graph to indicate Latasha's
optimal consumption choice given that budget constraint.
BLACK-AND-WHITE FLYERS
1000
900
800
700
600
500
400
300
200
100
0
0
25 50
75
100 125 150 175 200 225 250
COLOR FLYERS
Budget Constraint
Optimum
?
At the optimum that you indicated on the graph, Latasha's marginal rate of substitution is equal to 2 flyers
in black and white per flyer in color.

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