# Assignment1. Rummy has \$40 a week to spend on burger and cake. The price of burger is \$5 and theprice of cake is \$2 a slice.Calculate Rummy's real income in terms of cake.b. Calculate the relative price of cake in terms of burger.c. Calculate the equation for Amy's budget line.d. If Rummy's income increases to \$60 a week and the price of burger and cake remainunchanged describe the change of his budget line.If the price of cake doubles while the price of burger remains at \$5 and Rummy'sincome remains at \$40 describe the change in his budget line.a.e.f. If Rummy's income is \$20 and all the money spend to purchase burger, how many burgerhe can purchase?

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Step 1

Hey, since there are multiple subpart questions posted, we will answer first three subpart question.

Step 2

a.

Rummy ‘s real income in terms of cake can be calculated as follows:

Thus, the real income in terms of cake is \$20

Step 3

b.

Relative price of cake in terms of burger can be calculated as follows:

Thus, the relative price of cake in terms of burger is 0.4.

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