Malita has K150 of disposable income to spend each week and cannot borrow money. She buys Milk balls and a composite good. Suppose that Milk balls cost K2.50 per bag and the composite good costs K1 per unit. a) Sketch Malita’s budget constraint. b) What is the opportunity cost, in terms of bags of Milk balls, of an additional unit of the composite good? c) Suppose that in an inflationary period the cost of the composite good increases to K1.50 per unit, but the cost of Milk balls remains the same. Sketch the new budget constraint. d) What is the opportunity cost of van additional unit of the composite good? e) Suppose now Malita demands a pay raise to fight the inflation. Her boss submits and raises her salary so that her disposable income is now K225 per week. Sketch the new budget constraint. Is Malita better off? f) What is the opportunity cost of an additional unit of the composite good? Please ANSWER e and f. The K before a number is just the currency abbreviation.Thanks
Malita has K150 of disposable income to spend each week and cannot borrow money. She buys Milk balls and a composite good. Suppose that Milk balls cost K2.50 per bag and the composite good costs K1 per unit.
a) Sketch Malita’s budget constraint.
b) What is the
c) Suppose that in an inflationary period the cost of the composite good increases to K1.50 per unit, but the cost of Milk balls remains the same. Sketch the new budget constraint.
d) What is the opportunity cost of van additional unit of the composite good?
e) Suppose now Malita demands a pay raise to fight the inflation. Her boss submits and raises her salary so that her disposable income is now K225 per week. Sketch the new budget constraint. Is Malita better off?
f) What is the opportunity cost of an additional unit of the composite good?
Please ANSWER e and f. The K before a number is just the currency abbreviation.Thanks
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