1. Interpret the figure below that illustrates Sally's budget line and her preferences. a. At what point the marginal rate of substitution is equal to the relative price? b. Is it possible for Sally to attain the new indifference curve? Why? c. If Sally has Php 60 a week budget. What is the price of oranges and apples based on the given quantity in the budget line? d. Budget equation Figure 1 Figure 10 10 15 30 Oranges (number per wook) Hotdogs (number per week) Apples (number per week) Hamburgers (number per week)

1. Interpret the figure below that illustrates Sally's budget line and her preferences. a. At what point the marginal rate of substitution is equal to the relative price? b. Is it possible for Sally to attain the new indifference curve? Why? c. If Sally has Php 60 a week budget. What is the price of oranges and apples based on the given quantity in the budget line? d. Budget equation Figure 1 Figure 10 10 15 30 Oranges (number per wook) Hotdogs (number per week) Apples (number per week) Hamburgers (number per week)

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Theory Of Consumer Choice

Section: Chapter Questions

Problem 11PA

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please only do: if you can teach explain each partc: what does it mean? can you show graphs: For these to be optimal choices with such preferences, the indifference curve through a must lie entirely on or above the budget line associated with (p, w), and simi- larly for r' for the budget line associated with (p', w'). how do you know this:Because each of these bundles lies below the other budget line, this implies that the indifference curves must cross, which is impossible. can you show graphs: note that (3,1) is a conver combination of x and x', so for conver preferences must be weakly preferred to x (the less preferred bundle between a and a'). But then the bundle (3,5/3) must be strictly preferred z, contradicting that is optimal given the initial budget set