-
Assume that Sophia has $1000 per month to spend between dinners at a Thai restaurant and evenings at MECA, a local club. Assume that going to MECA costs $200 and eating at the Thai restaurant costs $100.
i. Draw Sophia’s budget constraint. Restaurants on the Y axis.
ii. Assume that Sophia’s income rises and she can now spend $2000 per month. Draw her new budget constraint in relation to the old.iii. Suppose the price of evenings at MECA increase to $400, while Sophia’s income and the price of the Thai restaurant is unchanged from part (i). Illustrate the new budget line in relation to the old
Illustrate the new budget line in relation to the old
-
Jody has $360 to spend on her summer vacation. She decided to use the money on trips to the zoo and on tickets to the movies. Her original budget constraint is shown below. Let X represent movie tickets and Y represent trips to the zoo.
i. What is the equation of the original budget constraint?
ii. What is the price of a movie ticket? a trip to the zoo?
iii. Assume a price change occurs and Jody now face the new budget constraint. What is the equation of the new budget constraint?
iv. With the new budget constraint, what is the price of a movie ticket? a trip to the zoo?
Trending now
This is a popular solution!
Step by step
Solved in 1 steps with 6 images
