consider a consumer who consumes only two goods :peas and beans. She has an income of K10, the price of beans is k0.20 while the price of peas is0.40. a) Draw the budget line b) Suppose that the consumer consumes 30kg of beans. Assuming that she spends all her income, how many kgs of peas is she going to consume? c) Assume that the price of peas falls from k0.40 to k0.20. Assuming that the consumer still consumes 30kg of beans, find the new quantity of peas.

Question

consider a consumer who consumes only two goods :peas and beans. She has an income of K10, the price of beans is k0.20 while the price of peas is0.40.
a) Draw the budget line
b) Suppose that the consumer consumes 30kg of beans. Assuming that she spends all her income, how many kgs of peas is she going to consume?
c) Assume that the price of peas falls from k0.40 to k0.20. Assuming that the consumer still consumes 30kg of beans, find the new quantity of peas.
d) After the decrease in price of peas to k0.20 assume that the consumer is just as well off as she was in (b) if she has an income of K7.60. However, with that income and the new price of peas, she would have consumed 20kg of beans. Find the quantity of peas she would have consumed in this case. Show it on the graph.

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