Adwoa purchases only pasta and salad with her income of ghc 160 a month. Assume the price of pasta is ghc 6 and the price of salad is ghc 5 each. Answer the following questions about Adwoa’s budget. i. Derive Adwoa’s budget equation and draw the line of this equation ii. Using the budget line drawn in (i) show the effect of a 100 percent increase in the price pasta hold the price of salad and income constant. iii. Using the budget line drawn in (i) show the effect of a 100 percent increase in her income hold the price of pasta and salad constant.
Adwoa purchases only pasta and salad with her income of ghc 160 a month. Assume the price of pasta is ghc 6 and the price of salad is ghc 5 each. Answer the following questions about Adwoa’s budget. i. Derive Adwoa’s budget equation and draw the line of this equation ii. Using the budget line drawn in (i) show the effect of a 100 percent increase in the price pasta hold the price of salad and income constant. iii. Using the budget line drawn in (i) show the effect of a 100 percent increase in her income hold the price of pasta and salad constant.
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter6: Consumer Choice And Demand
Section: Chapter Questions
Problem 2QFR
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Adwoa purchases only pasta and salad with her income of ghc 160 a month. Assume the price of pasta is ghc 6 and the price of salad is ghc 5 each. Answer the following questions about Adwoa’s budget.
i. Derive Adwoa’s budget equation and draw the line of this equation
ii. Using the budget line drawn in (i) show the effect of a 100 percent increase in the price pasta hold the price of salad and income constant.
iii. Using the budget line drawn in (i) show the effect of a 100 percent increase in her income hold the price of pasta and salad constant.
iv. What is the slope of Adwoa’s budget line? What does this mean to Adwoa?
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