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Question 5

Question 5

Economics Today and Tomorrow, Student Edition
Economics Today and Tomorrow, Student Edition
1st Edition
ISBN:9780078747663
Author:McGraw-Hill
Publisher:McGraw-Hill
Chapter5: Buying The Necessities
Section: Chapter Questions
Problem 22AA
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  1. Draw a graph of Tarik’s budget line (bread on the y axis).

 

Identify the intercept:

 

Bread intercepts: Set S=0 in the budget constraint equation:

               So, the bread intercept is (0,40).

               Sausage intercept: Set B=0 in the budget constraint equation:

            So, the sausage intercept is (35, 0).

 

              Plot the Points:

  Plot the point (0, 40) on the y-axis.

  Plot the point (35, 0) on the x-axis.

Draw a graph of Tarik’s budget line (bread on the y axis).

 

Tarik consumes bread and sausages. He has decided that his monthly budget
will be $1400. Suppose that one bread costs $35, while one sausage costs $40.
i. What is the expression for Tarik’s budget constraint?

Draw the graph for this

Question 5
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