a. Illustrate John's budget constraint in the space below if a movie rental is $2 and a pizza costs $7.50. 30 25 20 15 10 5 0 0.0 1.0 2.0 3.0 Pizza Budget constraint 4.0 5.0 6.0 b. Suppose John's mother finds a coupon for one free pizza and gives it to him. Illustrate this new budget constraint below. 30 25 20 15 10 5 0 0.0 1.0 2.0 3.0 Pizza 40 5.0 6.0
a. Illustrate John's budget constraint in the space below if a movie rental is $2 and a pizza costs $7.50. 30 25 20 15 10 5 0 0.0 1.0 2.0 3.0 Pizza Budget constraint 4.0 5.0 6.0 b. Suppose John's mother finds a coupon for one free pizza and gives it to him. Illustrate this new budget constraint below. 30 25 20 15 10 5 0 0.0 1.0 2.0 3.0 Pizza 40 5.0 6.0
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Theory Of Consumer Choice
Section21.1: The Budget Constraint: What The Consumer Can Afford
Problem 1QQ
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Transcribed Image Text:c. Now suppose the movie rental site sponsors a holiday promotion: rent 5 movies at full price and receive a 50 percent
discount on all additional rentals. Illustrate John's new budget constraint.
Movies
30
25
20
15
10
5
0
0.0
1.3
2.7
Pizza
4.0
5.3 6.0
d. The price of pizza increases from $7.50 to $10. Illustrate John's budget constraint after this price increase.
Movies
30
25
20
15
10
5
0
0.0
1.0
2.0
3.0
Pizza
4.0
5.0
6.0
Transcribed Image Text:a. Illustrate John's budget constraint in the space below if a movie rental is $2 and a pizza costs $7.50.
Movies
30
25
20
15
10
5
0
0.0
1.0
2.0
3.0
Pizza
Budget constraint.
4.0
5.0
6.0
b. Suppose John's mother finds a coupon for one free pizza and gives it to him. Illustrate this new budget constraint below.
Movies
30
25
20
15
10
5
0
To
0.0
1.0
2.0
3.0
Pizza
4.0
5.0
6.0
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