Suppose you have $100 to spend on Skittles and M&Ms. The price of Skittles is $5.00 and the price of M&Ms is $1.00. (a) Write the budget constraint and draw the budget constraint on a graph that has M&Ms on the vertical axis. (b) Assuming you spend all of your money on skittles and M&Ms. If you bought 10 M&Ms how many Skittles did you purchase? (c) Suppose the price of skittles increases from $5.00 to $6.00. Rewrite the budget constrain and draw the new budget line, including and indicating intercepts and the slopes. (d) Suppose the price of Skittles drops from $5.00 to $1.00. You are limited to only a maximum of 75 skittles. Draw this new budget constraint on the same graph from your answers in part (a) and (c
Suppose you have $100 to spend on Skittles and M&Ms. The
is $1.00.
(a) Write the budget constraint and draw the budget constraint on a graph that has M&Ms on the vertical
axis.
(b) Assuming you spend all of your money on skittles and M&Ms. If you bought 10 M&Ms how many
Skittles did you purchase?
(c) Suppose the price of skittles increases from $5.00 to $6.00. Rewrite the budget constrain and draw the
new budget line, including and indicating intercepts and the slopes.
(d) Suppose the price of Skittles drops from $5.00 to $1.00. You are limited to only a maximum of 75
skittles. Draw this new budget constraint on the same graph from your answers in part (a) and (c).
Every combination of products and services that a customer may purchase at the current market price within the parameters of his or her available money is referred to as a budget constraint in economics. Consumer theory looks at the criteria for consumer choices using the concepts of a preference map and a budget limit.
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