As an economics student your budget for meals at the university is Rs 12,000 and you have two options during the course of you studies: (i) Eating at the university cafeteria for Rs 40 per meal (ii) Eating at the dining hall for Rs 10 per meal. A) Draw the budget constraint showing the trade-off between cafeteria and dinning hall meals, with cafeteria meals on x-axis and dining hall meals on y-axis. Assume you spend equal amounts on both goods, draw an indifference curve showing the optimum choice. Label the optimum as point A.
As an economics student your budget for meals at the university is Rs 12,000 and you have two options during the course of you studies: (i) Eating at the university cafeteria for Rs 40 per meal (ii) Eating at the dining hall for Rs 10 per meal. A) Draw the budget constraint showing the trade-off between cafeteria and dinning hall meals, with cafeteria meals on x-axis and dining hall meals on y-axis. Assume you spend equal amounts on both goods, draw an indifference curve showing the optimum choice. Label the optimum as point A.
Chapter3: Preferences And Utility
Section: Chapter Questions
Problem 3.11P
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As an economics student your budget for meals at the university is Rs 12,000 and you have two options during the course of you studies:
(i) Eating at the university cafeteria for Rs 40 per meal
(ii) Eating at the dining hall for Rs 10 per meal.
A) Draw the budget constraint showing the trade-off between cafeteria and dinning hall meals, with cafeteria meals on x-axis and dining hall meals on y-axis. Assume you spend equal amounts on both goods, draw an indifference curve showing the optimum choice. Label the optimum as point A. (2 Mark)
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