Chapter 10A, Problem 16P

To determine

1. For each of the two years for which you have data, what is the maximum number of packs of eggs that an average Japanese household could have consumed each month? The maximum number of 100-gram portions of tuna? In one diagram, draw the average Japanese household’s budget line in 2013 and in 2015. Place the quantity of eggs on the y-axis and the quality of tuna on the x-axis.
2. Calculate the relative price of eggs in terms of tuna for each year. Use the relative price rule to determine how anaverage household’s consumption of eggs and tuna would have changed between 2013 and 2015.

Concept Introduction:

Budget Line − It is a line representing the total income of a consumer through which she could buy the possible combination of goods.